Visa vs Mastercard: What's the Difference?

When it comes to signing up for a credit card, one of the choices you may have to make is whether to go with one of the big names in credit card payment networks – Mastercard or Visa. But is there any difference between the two? And what should you be looking for if choosing between the two? We take a look.

Credit cards are an everyday feature of finance. There were almost 260 million purchases worth more than $28 billion made on about 18 million personal credit cards in Australia in February 2020 alone, according to the Reserve Bank of Australia. To service this huge market, there are hundreds of different types of credit card packages available through financial institutions, each with their own unique set of benefits and costs.

However, most credit cards look the same – a rectangular piece of plastic with numbers on it. And more often than not, these cards would be stamped with the brand logo of either Visa or Mastercard.

So, what’s the difference – what do Visa and Mastercard do?

These two companies’ logos are on the lion’s share of credit cards in Australia – about 83% of all payments made in June 2019 were for cards stamped with one of their logos, according to Statista.com. However, these companies have only a small amount of influence over the actual credit card product and benefits that a user may end up signing up for, as:

  • They are just digital payment platforms – they only provide the system that allows a payment transaction to take place rather than distributing cards themselves.
  • They do not issue credit cards, and so do not determine, for example, how much interest you could be charged on outstanding balances, nor what types of points you will earn if your card is attached to a rewards program. The issuing banks decide these things.
  • Credit cards from both platforms are accepted just about equally anywhere in the world.

There are some minor differences between the two payment platforms, however.

These include:

  • Some banks and outlets have “exclusive” arrangements with one payment platform over the other. For example, in 2015 National Australia Bank signed a 10-year agreement with Visa which means until 2025, the bank’s customers will only be offered Visa credit cards.
  • “Benefit” programs – perks built into the cards by Visa or Mastercard before the issuing bank applies its conditions – differ slightly. See below section “What are premium credit cards” for more information. Mastercard has a “standard Mastercard” offering, along with higher levels of benefits – Platinum, World and World Elite – while Visa has a standard offering with extra benefits available with the Gold, Platinum, Signature and Infinite packages. However, banks may change these conditions and/or offer their own benefit programs, so it could be a good idea to check out the benefit package conditions on each individual credit card product a bank is offering before making a decision.

As far as most consumers are concerned, there is no real difference between Mastercard and Visa. The two 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, so the main differences between credit cards are created by the banks that issue them.

Visa or Mastercard: If they are much the same, how do you choose the right credit card?

The Australian credit card market is a somewhat complex one, with hundreds of different types of packages on offer from financial institutions, each with its own set of benefits and conditions. When it comes to choosing the right credit card for your needs, you could start by assessing:

  • What you will use it for: Is it for a one-off purchase? Or will you be buying items regularly on it? Different cards suit different uses (as discussed in more detail, below).
  • Your capacity to repay any debt that accumulates: Paying for items in “credit” on the card actually means you are borrowing money from a financial institution – going into debt. The bank will attach a set of conditions when it comes to repaying that debt, such as charging interest and expecting payments to be made by a specific deadline if you want to avoid additional costs. Interest rates on credit cards are typically much higher than for other types of debt products, such as personal loans or home loans. It could be worth comparing other types of borrowing against the long-term costs of having a credit card.
  • If you would use the credit card’s fringe benefits: Take a look at the card package’s rewards programs and any other benefits it offers, such as insurance over items purchased.
  • What credit cards, packages and deals your bank of choice is offering and how those packages compare to the rest of the market.

It’s also a good idea to research the different types of cards that are available, and what features they offer.

What types of Mastercard and Visa credit cards are available from lenders?

While there are a huge range of cards available carrying the Visa or Mastercard logo, most of them can be classified as falling to these broad consumer categories, which Canstar uses when awarding its Star Ratings:

  • Premium – for consumers wanting a card that offers more benefits and frills than a more basic credit card would, such as access to a concierge service or complimentary travel insurance
  • Rewards – for those who want to earn a return on their everyday spending, in the form of cash-back, gift cards or lifestyle rewards, for example
  • Frequent flyer – suitable for those who want to be able to redeem card points for flights
  • Low rate – for those who want a low rate and flexible repayment conditions
  • Low fee – for those after a low ongoing fee and potential access to some premium features
  • Balance transfer – for those who want to transfer the outstanding balance from one card to another.

Here is a brief explanation of what each of these card types are, and – to give you an idea what’s on offer from various financial institutions – a selection of some of the credit cards available on Canstar’s database.

What are premium credit cards?

Ever wondered what a “Platinum” or “Signature” credit card is? These labels and other names – like “silver”, “gold” or “black” – tend to indicate that the card is part of a package put together by the bank (sometimes in conjunction with Visa or Mastercard) offering more perks than a standard credit card. These types of cards are typically known as “premium” cards.

While premium cards offer more benefits than a standard card, they also typically cost the user more in the form of higher fees and/or interest rates charged on outstanding balances. In many cases, these cards are only available to higher-income, higher-spending customers, too.

The extra perks could include things such as travel insurance for when you go overseas, inconvenience cover if your domestic flight is cancelled or a concierge service that can perform tasks such as booking tickets and making reservations.

What are rewards credit cards?

These types of credit cards have a rewards program attached, designed to give the user bonuses, either instantly or accumulatively, each time they use their card.  These bonuses could include the ability to earn “points” which can be used instead of cash to pay for flights or goods and services, while some allow the points to be converted to cash which is then taken off the balance that remains owing on the card. However, most rewards cards have annual fees, spending limits and other restrictions or conditions which can make them more costly to use than other types of cards.

Rewards Credit Cards

Visa Rewards Credit Cards

Below is a snapshot of rewards credit cards using the Visa network on Canstar’s database with links to provider’s websites, sorted by Star Rating (highest to lowest), then provider name (alphabetically) based on a monthly spend of $2,000. Check upfront with the provider and read the PDS to confirm whether any particular credit card product suits your needs before committing to it.

Mastercard Rewards Credit Cards

Below is a snapshot of rewards credit cards using the Mastercard network on Canstar’s database with links to provider’s websites, sorted by Star Rating (highest to lowest), then provider name (alphabetically) based on a monthly spend of $2,000. Check upfront with the provider and read the PDS to confirm whether any particular credit card product suits your needs before committing to it.

What are frequent flyer credit cards?

These types of cards are attached to a specific rewards program – an airline’s frequent flyer program that earns the user points to spend on flights (and sometimes other goods and services, too, depending on the scheme). Australian programs include Qantas and Virgin – called “Velocity” – frequent flyer programs.

Please note that as of Tuesday 21 April 2020, the Velocity frequent flyer program has paused reward redemptions. During the pause, customers with an eligible credit card may still be able to earn Velocity points, but will be unable to redeem their points on flights or other goods and services. Please check with your credit card provider directly for details before making any decision relating to your card or points. 

What are low rate credit cards?

Low rate credit cards typically come with lower purchase rates than other types of cards. That means if you do not pay off the entire balance when the credit card payment is due, the interest charged on your outstanding balance could be lower than what it would be on other, higher-rate credit cards. However, low rate credit cards are generally ‘no frills’ and tend to not include the rewards programs, perks and bonuses that premium or rewards cards may offer. It could also be possible that card fees could be higher than some other types of cards (such as “low fee” cards).

Low Rate Credit Cards

Visa Low Rate Credit Cards

Below is a snapshot of low rate credit cards using the Visa Network on Canstar’s database with links to provider’s websites, sorted by Star Rating (highest to lowest), then provider name (alphabetically) based on a monthly spend of $2,000. Check upfront with the provider and read the PDS to confirm whether any particular credit card product suits your needs before committing to it.

Mastercard Low Rate Credit Cards

Below is a snapshot of low rate credit cards using the Mastercard network on Canstar’s database with links to provider’s websites, sorted by Star Rating (highest to lowest), then provider name (alphabetically) based on a monthly spend of $2,000. Check upfront with the provider and read the PDS to confirm whether any particular credit card product suits your needs before committing to it.

What are low fee credit cards?

Typically, credit cards have ongoing annual fees, which the bank charges to cover the cost of providing the card and any associated benefits, such as rewards programs. Low fee credit cards typically have lower ongoing fees than other types of cards, but there is often a trade-off that occurs for that to happen. Some card packages may have low fees but offer few extra benefits, while others may have some benefits but charge higher interest rates on overdue balances to pay for them.

Low Fee Credit Cards

Visa Low Fee Credit Cards

Below is a snapshot of low fee credit cards using the Visa network on Canstar’s database with links to provider’s websites, sorted by Star Rating (highest to lowest), then provider name (alphabetically) based on a monthly spend of $2,000. Check upfront with the provider and read the PDS to confirm whether any particular credit card product suits your needs before committing to it.

Mastercard Low Fee Credit Cards

Below is a snapshot of low fee credit cards using the Mastercard network on Canstar’s database with links to provider’s websites sorted by Star Rating (highest to lowest), then provider name (alphabetically) based on a monthly spend of $2,000. Check upfront with the provider and read the PDS to confirm whether any particular credit card product suits your needs before committing to it.

What is a balance transfer card?

Some credit cards allow users to add debt from another credit card or cards. Typically, the “balance transfer” card has a lower interest rate than the original card, which could potentially help the user to pay off the debt more quickly, or cut down on monthly repayments. However, there are some potential catches to this type of transaction:

  • There could be an up-front fee to transfer debt from another card.
  • The lower interest rate could be a “promotional rate”, which expires after a certain time and then reverts to a higher interest rate.
  • There could be ongoing higher fees associated with these cards than other types of credit cards.

This article was reviewed by our Sub-editor Tom Letts before it was published as part of our fact-checking process.

Additional reporting: TJ Ryan, William Jolly, James Hurwood, Ellie McLachlan . Image: AliaksaB (Shutterstock)


Amanda HorswillAmanda is a Senior Finance Journalist at Canstar. A journalist for more than two decades, Amanda has covered a gamut of subjects, including property, lifestyle, hyper-local news, data journalism, the Arts and careers. She’s served as the Editor of Brisbane News, Deputy Features Editor for The Sunday Mail, Deputy Editor – Digital at Quest Community News, and a host of other senior positions at News Corp, prior to joining Australia’s biggest financial comparison website, Canstar. Amanda is fascinated with the ever-changing world of finance. A passionate believer in the motto “knowledge is power”, she strives to translate the news into practical information that will help readers make informed decisions about their future. When not analysing the latest economic news, Amanda can be found pouring over local property listings, searching for her next renovation project. Follow her on Twitter and LinkedIn

 

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