MasterCard and Visa – What’s the Difference?
Posted September 10th, 2008 and last modified October 7th, 2011
Visa or MasterCard? These credit card companies mediate between banks and consumers in charging and settling financial transactions done anywhere in the world.
Which Looks Nicest?
Your choice between Visa and MasterCard could well boil down to which logo you think looks nicest on a plastic card. In fact, a card user shouldn’t notice any difference at all between the cards in the behind the scenes electronic transactions involved in getting money from the issuing banks to the card-accepting merchants.
A lot happens at the swipe of a card but you won’t be able to tell the difference between those happenings with Visa or MasterCard, not even with a sophisticated stopwatch. About the only difference in having a Visa or a MasterCard is where each card is accepted.
Visa Is Larger – Somewhat
In Australia, chances are, if a merchant accepts MasterCard, usually Visa is accepted as well, and vice versa. This may not always be the case internationally. Visa is the largest provider of credit card processing, but MasterCard is close on its heels. Both are almost equally ubiquitous in over 200 countries. If you really want to cover the waterfront, you may want to carry two cards, each having one of the logos of the card processing companies. But, you’ll probably find that unnecessary.
Extraordinary Transaction Processors
Perhaps you noticed the phrase “card processing companies” earlier. You see, neither Visa nor MasterCard is a financial institution, per se. They do not issue the credit or debit cards. They do not set the rates, terms, or benefits of the cards. They both provide the card processing services. They both provide the important links between banks and providers of goods and services in these ways:
- They facilitate transactions.
They both have set up incredible international electronic networks that provide a link between the banks that issue the cards and the merchants and service providers that accept them.
- They verify the availability of funds.
Their international electronic networks can almost instantly check the availability of funds in any fashion of account, based on credit or cash, that may have been set up by an issuing bank or other financial institution.
- They check for security and fraud.
They help merchants and banks be assured that accounts are being used only by those authorised through the use of PIN’s and other special codes. They also offer systems for investigation and recompense should fraud occur.
- They provide trust.
Their logos are symbols of trust – that money will be delivered where money is due. They lend trust to users that their credit information won’t be stolen or abused. They lend trust to merchants that purchases will be covered.
- And — They are profitable.
Their security services are necessary, their international electronic networks are facile, and the convenience they offer is extraordinary. They do collect certain fees from banks and merchants and thereby make their services profitable.
Don’t Kill the Messenger
MasterCard or Visa may very well have reported to your bank about your profligacy in that Arabian souk last month, but they are not the entities that imposed the over-the-limit fee for your silks, brass urns, and trinkets – that was done by the credit card issuer. Indeed, the issuing bank or other financial institution may pass along to you some of the cost in fees Visa or MasterCard charges them, but you really can’t blame the processors for that either.
Understanding Processors vs. Issuers
You may have seen a Visa card advertised at a rate of 14% apr (annual percentage rate), but Visa had nothing to do with setting that rate. The bank that issued the card set it. The issuer sends out the monthly statements, it allows whatever credit the user may be due according to credit reports, and it issues the card itself. The issuer is the main party in the whole deal. Visa and MasterCard are the processors that carry the transactions and ensure their accuracy and security.
Visa and MasterCard Aren’t the Only Choices You Must Make
When a user considers getting a certain credit card, he or she will be lured by the interest rates, cash-back rewards, air miles, and other come-ons. Those will be the determining factors on which a card is chosen, not the MasterCard or Visa logo.
A user could have a MasterCard from one bank and it could operate in a totally different way than a MasterCard from another bank. One could be a cash-back card, the other a balance-transfer card, or an air-mileage card. The same goes for Visa cards. Debit cards with either logo are accepted anywhere the particular logo is displayed.
So, Which Do You Choose?
At one point, the Visa logo carried a certain panache. After its initial ploy of seeding California with thousands of pre-approved, unsolicited cards, a user had to be asked to join the Visa network. That panache fell away as folks realised the cards could be bought with annual fees.
MasterCard still is the younger brother, but both networks can be equally trusted for accuracy and security. The choice for you is the card that best fits your financial situation, your financial goals, and your lifestyle, regardless of which network processes the card activity.
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Image source: bjohnsonjewelry
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