No doubt you’ve seen the logo before, but just what is a Visa card and how does it compare to Mastercard? Does it matter which you choose when deciding on a credit card?
Put simply, Visa is a payment network. When you buy something, Visa processes the payment from your bank to the merchant so that the merchant gets paid. This happens as long as you’re making an electronic (rather than cash) payment, regardless of whether you’re shopping in person, on your laptop, tablet or mobile.
American Express and Discover are also payment networks, but Visa and Mastercard are undoubtedly the most widely accepted.
By way of background, Visa’s operations began in 1958 when Bank of America launched BankAmericard® credit card. It was the first consumer credit card program and brought the company great success, expanding operations internationally in 1974. In 1976, BankAmericard became Visa — a name which sounded the same in all languages.
Visa continued to grow as regional businesses around the world merged into Visa, Inc. in 2007. A year later, it went public in one of the biggest IPOs in history.
Today, Visa operates in more than 200 countries and territories, with the mission “to be the best way to pay and be paid, for everyone, everywhere.”
As the biggest payment network, Visa processed a staggering $2.1 trillion in total payment volume on 43.2 billion transactions in the second quarter of 2019 alone. The payment network giant also estimates that by the end of 2020, its number of contactless cards in the U.S. will triple to 300 million.
Of course, those who are shopping for a credit card often prefer one that’s widely accepted. The more Visa dominates the global payment network industry, the more new consumers and merchants it attracts.
Payment network vs. card issuer
Despite Visa’s popularity, there is often confusion around what Visa card’s role is when it comes to credit card benefits. Unlike American Express and Discover, Visa does not issue credit cards. Instead, credit cards are issued by banks such as Chase, Capital One and Wells Fargo, just to name a few. It’s the role of the issuer — rather than the payment network — to determine borrowing terms like interest rates and fees and to administer rewards programs and credit card perks.
The implication for consumers is that although many credit cards bear the Visa logo, they have drastically different benefits and terms that have been determined by the issuer. The same goes for Mastercard.
Visa and Mastercard: A comparison
In practice, Mastercard is almost as widely accepted as Visa.
Where Visa and Mastercard really differ is the secondary benefits offered to credit cardholders. Generally, Visa’s benefits are focused around travel and protection, while Mastercard has a bigger focus on discounts and promotions.
Visa offers three tiers of benefits: Traditional, Signature and Infinite.
- The Traditional tier includes zero fraud liability, emergency card replacement or cash disbursement, auto rental collision damage waiver and emergency roadside.
- The Signature tier includes all of the Traditional benefits, plus 24-hour travel and emergency assistance and 12-month extended warranty.
- The Infinite tier includes benefits from the other tiers, as well as travel accident protection, trip cancellation and interruption protection, trip delay reimbursement, lost luggage cover of up to $3,000 per trip (or $2,000 per bag if you live in New York), return protection and purchase protection.
Mastercard also offers three tiers of benefits: Standard, World and World Elite.
- Cardholders with Standard benefits can rely on emergency card replacement anywhere, anytime and in any language, as well as zero fraud liability and identity theft protection.
- Those with World benefits have access to all Standard benefits, plus trip planning, concierge service and discounts and promotions, like $5 off every purchase of $25 or more with Postmates and free ShopRunner membership.
- Finally, cardholders with World Elite benefits can take advantage of World benefits, along with exclusive golf offers and even more discounts and promotions, such as $10 Lyft credit if you take at least five rides a month, 5 percent cash rewards on Boxed orders, and 10 percent off rental homes with onefinestay.
Visa is undoubtedly one of the largest and most recognized payment networks in the world, making it a safe card to go with if worldwide acceptance is important to you
But bear in mind that Visa doesn’t administer rewards programs, dictate interest rates or set credit card fees. So when deciding on the right card for you, it’s critical to consider what the card issuer is offering in these aspects.
Other credit card terms
Annual fee is a yearly charge levied by credit card issuers — including banks and financial institutions — to customers for using their credit cards. Payment networks such as Visa and Mastercard do not determine this charge.
Annual percentage rate, or APR, reflects the full cost a lender charges per year for lending funds. Visa does not determine the APR on a credit card product.
A balance transfer involves moving outstanding debt from one account to another. Those with credit card debt commonly use a balance transfer credit card to pay off debt within a zero percent interest window.
Credit history is used by a lender to determine whether to approve a lending application. It shows how the applicant has managed credit in the past, including how much debt they owe, number of credit lines and whether payments were made on time.
Credit rating is usually expressed as a score and represents a person’s ability to repay a financial obligation based on his or her income and credit history.
Variable rate is the interest rate charged on variable rate financial products, including many credit cards. It’s expressed as an annual percentage and changes according to a reference rate.