Debit and credit cards have become increasingly popular over the last half-century, making it convenient for millions of consumers to make their day-to-day purchases without having to cart around cash or checks. Visa and Mastercard are two of the leading credit card payment networks in the industry, innovating the way both consumers and merchants conduct business.
Both companies offer convenience to consumers through a variety of payment options, both physical and digital. Visa and Mastercard both provide zero-liability fraud protection for stolen and lost cards. But despite their similarities, several embedded differences distinguish the companies from each other.
- How Visa and Mastercard Work
- Visa vs. Mastercard Benefits and Services
- Which Payment Network Will You Choose?
Visa and Mastercard work very similarly in that they are consumer-recognized brands that serve as payment networks — intermediary entities responsible for processing the payments made to a given merchant. Both payment networks provide cards to financial institutions that, in turn, offer the cards to consumers. The networks also administer many cardholder benefits on behalf of the card issuers.
One misconception is that Visa and Mastercard make money from the high interest rates associated with credit cards. The truth is, they don’t set the established interest rate associated with a particular card. Instead, your financial institution sets the rate. Visa and Mastercard make money by charging financial institutions a membership fee to use the brand and network. Furthermore, Visa and Mastercard assess a processing fee every time a consumer transacts with their card.
The fee often depends on factors like the card type, payment type and whether the customer is present. For example, for a customer making an in-person purchase at a retail vendor using a Visa Signature Preferred card, Visa charges the merchant a fee of 2.10% plus 10 cents. Alternatively, for a consumer using an Exempt Visa Check Card at the same merchant, Visa might assess a flat 30-cent fee. Thus, the rates each card charges range from a few pennies to thousands of dollars.
Visa and Mastercard have some of the lowest fees compared to other processors such as Discover and American Express. Merchants can expect to pay anywhere from 1.5% to 3.5% per transaction.
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Visa and Mastercard are equally accepted almost everywhere consumers want to shop, and both offer credit card consumers a variety of benefits through tier-based models. Visa’s program includes Basic, Signature and Infinite tiers. Mastercard also has a three-tiered model: Basic, World and World Elite. Take a look and compare the benefits of both providers.
Visa Basic vs. Mastercard Basic
At the basic level, consumers can utilize Visa’s standard built-in benefits such as fraud protection.
Much like Visa’s Basic tier, Mastercard offers its Basic users zero-liability fraud protection. It also offers limited price protection on purchases.
Visa Signature vs. Mastercard World
The Visa Signature package comes with perks like travel and emergency travel assistance services, warranty manager service and discount rates on hotels, cruises and car rentals. You’ll also get access to Visa Signature Concierge service, which provides 24/7 help with researching travel, booking tickets to a show or buying presents for a loved one.
Its counterpart, Mastercard World, offers both World and World Elite (second and third-tier) customers shopping perks such as free two-day shipping at select retailers and extended warranty protection. It also offers World customers limited travel benefits.
Visa Infinite vs. Mastercard World Elite
Visa Infinite is the highest tier Visa offers. Users receive most of the aforementioned services plus additional purchase protections and insurance-related benefits and discounts related to travel.
In contrast, Mastercard’s World Elite suite offers a 24/7 concierge service that’s so sophisticated you might start to think of it as your very own personal assistant. World Elite also comes with discounts on airline tickets and hotel upgrades and reimburses you for nonrefundable cancellations or fees to change flights. Additionally, you can get a personal meet-and-greet agent to escort you through almost any airport in the world.
Anyone who rents cars often might find that Visa is a better value because of its rental car insurance benefits. You’ll also get roadside dispatch and zero liability in case of fraud. Further, Visa Signature’s upgraded perks include travel and emergency travel assistance services and warranty manager service.
Mastercard might be the better choice if you prefer rewards for buying gas, getting a price guarantee or obtaining a product warranty. Remember, the World Elite suite offers trip cancellation insurance for nonrefundable fees and tickets — something you might worry about when buying plane tickets. The bottom line is that, although both cards are quite similar — and merchants that accept credit cards can typically process both — they do have some subtle differences that make all the difference when you’re deciding between Visa vs. Mastercard.
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This article has been updated with additional reporting since its original publication.