Visa or MasterCard: what’s the difference?

The two leading credit card companies in the world today are the competitors Visa and MasterCard. They both operate in a very similar way. While Visa claims to have 2.4 billion cards issued, across more than 200 countries, MasterCard avoids direct comparison by saying it processes over 18 billion payments per year.² It is difficult to find any difference in the number of locations worldwide that accept the cards, which is now estimated at close to thirty million.

As far as most consumers are concerned, there is no real difference between the two. They are both widely accepted in over two hundred countries and it is very rare to find a location that will accept one but not the other.

However, neither Visa nor MasterCard actually issue any credit cards themselves. They are both simply methods of payment. They rely on banks in various countries to issue credit cards that utilise these payment methods. Therefore, the interest rates, rewards, annual fees, and all other charges are issued by your bank and when you pay your bill you are paying it to the bank or institution that issued your card and not Visa or MasterCard.

In terms of Australia, NAB recently announced that it has signed a 10 year exclusive agreement with Visa – which means that it will no longer be issuing Mastercard products. In terms of the other Big 4 banks, b Commonwealth Bank issues Mastercards rather than Visa, ANZ and Westpac both issue both products.

How Visa and MasterCard make their money is by charging the retailer for using their payment method. So the truth of the matter is that a Visa issued by one Bank will have very little to do with a Visa issued by other banks. There are slight differences in what Visa and MasterCard will charge the banks for things like foreign currency conversion fees but, by and large, the two remain competitive on basic offerings.

The battleground for winning wallet-share seems to be in high-end rewards offered. Platinum cards, in particular, offered by Visa and MasterCard give the card-holder all sorts of concierge and assistance services, plus exclusive offers to major concerts, sports tournaments etc. These platinum rewards are designed to tempt banks and other financial institutions into promoting one or the other, Visa or MasterCard, to their customers.

There are two other well-known players in the credit card game, American Express and Diners Club.

Back to the question that perplexes most people – which provider is best – Visa or MasterCard? For the vast majority of consumers you do not have to overly concern yourself with whether a credit card is MasterCard or Visa – in Australia, if a retailer accepts one then they accept both. You would be better off concentrating on the interest rate and other charges on the card, the balance transfer possibilities or their reward scheme. You are very unlikely to ever be effected by the fact that it is one and not the other.

It’s not unusual though to see some consumers who have two credit cards in their wallets, one a Visa and the other MasterCard. The thinking behind this is that if they were in the unusual position of finding a location that accepts one but not the other, then they would have the option of paying with either. Some people also like to take advantage of exclusive offers from both card types.

At the end of the day however, much more depends on the bank that gave you the card, than on the type of card it is.


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