Visa vs. Mastercard: What’s the difference and does it matter?

The above is a common question people ask themselves. Visa and Mastercard are no stranger to us. We often see either one of these names as a logo printed on our debit or credit card, and sometimes even as stickers at the cash register of shops. If that’s all, why do people compare them? To answer your question, we’ve gathered some more information in this article explaining the difference between Visa and Mastercard. Ready to dive in deeper?

The You-Should-Knows

What does Visa or Mastercard even mean, anyway? The idea is actually fairly simple! Visa and Mastercard are in fact, the two largest electronic payment networks in the world. Other payment networks include American Express (Amex) and Unionpay International (UPI). What these networks do is provide the electronic infrastructure needed to allow transactions to take place. They connect banks, merchants and consumers – communicating and facilitating the processing of transactions between all parties. Each payment network is separate to each other. For instance, Visa partners with institutions to issue Visa-supported payment cards that are processed exclusively on the Visa network.

You should also know that there are a few common misconceptions about Visa and Mastercard. To provide you with a clearer understanding on both networks, we’ve broken down two of the most misunderstood topics.

Visa and Mastercard are not card issuers

As explained before, Visa and Mastercard are payment processing networks. They do not actually issue or distribute cards to customers. If you’re wondering why your card has their logo on it, that’s because they have partnerships with your local financial institutions to provide their services as an electronic payment network.

Financial institutions such as banks, credit unions and even some retailers, are card issuers who provide payment cards (debit or credit) to customers. For instance, when you apply for a credit card at a bank, that bank is in charge of issuing the credit card to you, and thus it is the card issuer. Now, when you make a purchase using your debit or credit card, the communication and processing of the payment between the bank, merchant and yourself is likely supported by an electronic payment network provided by Visa or Mastercard.

Visa and Mastercard do not determine majority of card perks

The majority of the financial perks that we enjoy with our cards tend to be offered by the card issuer. That’s why if you apply for a credit card from two different banks, they may offer different perks. For instance, Bank A’s credit card may offer free travel miles and VIP access to airport lounge. On the other hand, if you apply for a credit card from a different bank, you might be offered discounts for select stores instead. You could get perks directly from Visa or Mastercard in collaboration with select merchants, but these offers are usually more limited. Thus, issuer benefits are usually more important than the benefits you might get from your payment network.

Visa and Mastercard do not determine card fees and charges

On top of that, keep in mind that interest rates, annual fees and other charges are also determined by the card issuer, usually the bank, and not Visa or Mastercard themselves. Thus, credit card bill payments are made directly to the bank or financial institution and not to either Visa or Mastercard, whereas debit card payments are subtracted directly from your savings account.

Where the Two Networks are Similar

Visa and Mastercard are in fact very similar in their features and functions. You can rest assured that no matter which payment network you choose, you’ll still get to enjoy the basic features of both cards, including the convenience of contactless payments and protection of fraud.  

Global Acceptance

Nearly every merchant in the world who accepts card payments, take both Visa and Mastercard. Payment networks require merchants to follow a rule called “honour all cards.” What that means is that if a merchant takes Visa, it must accept all Visa cards; if it takes Mastercard, it must accept all Mastercard cards.  

Contactless Technology

Wave goodbye to long queues and awkwardly searching your bag for change. All you have to do while making a purchase at any merchant that accepts contactless payments, is to simply tap your card on the payment terminal. Sceptical about this payment method being safe? Don’t worry, the contactless technology was created with the mindset of not having to sacrifice security in return for convenience. To give you more clarity, the cardholder’s name, 3-digit security code and billing information are never transmitted. Additional security features are also offered alongside contactless payment, such as signing or entering a PIN for higher value purchases with Mastercard. If you’re worried about fraud, we do too, and this brings us to our next point: fraud protection.  

Fraud Protection

Don’t you just hate unauthorized purchases? Fortunately, when you use either Visa or Mastercard, each network provides additional security features for merchants and card issuers who may opt in so that you can shop with a peace of mind. For example, Visa offers “Verified with Visa” to make online purchases more secure, working with participating merchants and issuers to protect your card from unauthorized use when online shopping. Mastercard also offers “Liability Protection” for all your card purchases against unauthorized transactions, so that your card issuer will not hold you responsible for such purchases.

Where Both Networks Differ

It’s safe to say there are only small differences in how both Visa and Mastercard operate. Keep in mind that Visa and Mastercard payment cards exclusively work on their respective networks. This simply means that if your card has the Visa logo stamped on it, it can only be processed by the Visa payment network. In practice, this difference is negligible as merchants usually accept both Visa and Mastercard. Other than that, as mentioned in the earlier sections, perks and fees largely differ because they’re determined the individual financial institutions. There are also some slight differences in the benefits offered directly by either network, but these offers are usually limited and tend to be overshadowed by better perks provided by the card issuers.

Do These Differences Matter?

To be honest, not really. As far as most consumers are concerned, there is no real difference between Mastercard and Visa. The two are both widely accepted in practically every country and it is very rare to find shops that will accept one but not the other. Ultimately, the most important thing to consider when deciding on a card is the value offered to you by the card issuers themselves. If you want to know more about choosing a card, check out this article here.