What most people don’t realize is that Visa and MasterCard are both payment technology companies. They don’t actually issue credit cards; banks do. Instead, they are the middle men that handle the electronic transfers between the banks, merchants, and consumers that occur when you use your card. So, it’s the bank issuing the card which determines the interest and fees that you’ll pay and the amount of credit you have, while the credit card company ensures that the money all ends up in the right place.
How do the parties involved make money?
Visa and MasterCard get a processing fee from the merchant for every transaction in exchange for using the credit card’s payment service. The card issuer (bank) is making money from the annual and other fees charged and the interest they collect if you do not pay your bill in full. Of course, the merchants are making money by selling their products and services, but they give up a small percentage to the credit card company. Even the consumer could be making money off of using credit cards if they avoid interest charges and use a card with cash back or other rewards.
So, why should you care if you get a Visa versus a MasterCard?
The short answer is that, for most people, there is no real difference between the two. The instances in the United States where one is card accepted by a merchant, but the other is not are extremely rare. It’s not like the battle between Coke and Pepsi where restaurants are forced to choose.
MasterCard has a cute video with some interesting statistics. They claim 1.9 billion cards, over 35.9 million locations worldwide where the card is accepted, and a network with more security than Lady Gaga.
Visa, on the other hand, does not have a fun video, but their website states that there are 2.2 billion Visa cards. Curiously, they don’t mention the number of merchants that accept the card, but reports are that it is comparable to MasterCard.
Both are accepted in over 200 countries, but if you are traveling to a remote corner of the world, it would probably be prudent to do some research to see if your particular destination accepts cards at all, and if so, which card may be more widely used. (There are additional points to consider when purchasing overseas such as foreign transaction fees.)
For those who like to spend some extra time researching the companies that they are supporting, Visa and MasterCard both have information about corporate responsibility on their websites. Visa breaks down its corporate social responsibility into four categories: Financial Inclusion and Literacy, Humanitarian Aid, Community Support, and Responsible Business Practices.
MasterCard also talks about Financial Inclusion and Literacy along with Philanthropy, and Leading by Example through creating an ethical and transparent workplace.
The Bottom Line
For most consumers, the focus in choosing a credit card should be the fees, interest rates, and rewards offered by the issuer, and not the Visa or MasterCard logo on the card. Compare Credit Cards & Apply Online here for a variety of issuers of both Visa and MasterCard.