Have you ever wondered if it’s better to have a Visa or a Mastercard? Or maybe you’re simply curious about the role these companies actually play when it comes to the cards in your wallet.
Visa and Mastercard are both payment networks, so they’re an integral part of the payment process. As a consumer, whether you have a Visa card or a Mastercard card really won’t affect you all that much. That’s because the card issuer, rather than the network, primarily dictates the card rates, features, and benefits. Also, compared to competing card networks, you can use Visa and Mastercard cards at just about anywhere that accepts credit card payments.
There are many similarities and differences between Visa and Mastercard, and it’s helpful to gain a basic understanding of how card payment processing works with these two cards. Let’s explore how these payment processing networks function and some special benefits that Visa or Mastercard cardholders may be able to access.
Understanding payment processing networks: Visa vs. Mastercard
When you make a purchase with a debit card or credit card, there’s a lot going on behind the scenes of that transaction. Payment networks are responsible for making the payment processing magic happen by ensuring that all the right data and information is sent back and forth to the appropriate parties.
Breaking down the process
In just a few seconds, a lot of information travels to and from the pertinent financial institutions after you swipe your card, tap it, or enter your card information online to make a purchase.
First, the retailer or business takes your debit card or credit card information, either at an in-store terminal or online. The payment processor (the technology company that powers the card reader or e-commerce checkout process) forwards your information to the payment network (Visa or Mastercard). Once the payment network receives your information, it sends it along to the issuing bank.
The bank will then authorize or decline the transaction. If the bank authorizes the transaction, the bank will notify you and the merchant that the purchase is approved. If the bank declines the purchase, it’s usually because you have insufficient funds or if the bank believes the purchase may be suspicious or fraudulent.
After the purchase
Once the purchase is approved, the card’s issuing bank puts a hold on the amount of your purchase until they’re ready to collect it. This means that if the purchase was $100 and your credit limit is $1,000, your available credit will decrease to $900 at the point of sale. Then, at the end of business day, the merchant performs an action called a batch settlement to finalize its daily transactions.
At that point, the payment network once again enters the process to communicate with the issuing bank to release the funds to the merchant’s bank. The payment network charges the merchant a fee for the transaction, which is taken from the final payment.
This whole process happens in a few seconds, with the exception of the merchant payment, which typically takes 24 to 48 hours.
Visa card overview
Visa is a publicly traded company headquartered in San Francisco. It has been in business since 1958, and is currently the largest payment network in the world. As of June 2024, there were more than 4.3 billion Visa cards in circulation.
Other notable Visa facts:
- Visa has business operations in 200 countries and territories, making it a global payment technology powerhouse.
- Visa works with card issuers to create prepaid cards, debit cards, and credit cards. If you have a card with the Visa logo, your transactions occur through the Visa payment network.
- Visa credit cards are broken down into three tiers: Traditional, Signature, and Infinite.
Mastercard overview
Mastercard launched in 1966 and is the second largest payment network in the world. According to the company’s Full Year 2023 Earnings Release, the brand had issued 3.3 billion Mastercard and Maestro-branded cards.
Other Mastercard facts:
- Mastercard’s global footprint spans 210 countries and territories.
- Mastercard’s headquarters are in Purchase, N.Y.
- Like Visa, Mastercard has prepaid, debit card, and credit card products. Its credit card levels are Standard, World, and World Elite.
Similarities across Visa and Mastercard
Visa and Mastercard are competing brands, but they operate in very similar ways. Here are some of the common elements the two payment networks share.
Zero liability fraud protection
As payment networks, Visa and Mastercard take responsibility for keeping transactions safe and secure. Therefore, when you hear that you have zero liability, that card feature actually comes from Visa or Mastercard. Zero liability means that if a fraudster is able to get hold of your card information and make a purchase, you may not be held responsible to pay for any of it as long as it is reported promptly.
High acceptance throughout the world
You’ve likely never run into an issue where a store didn’t accept a Visa or a Mastercard payment. That’s because both payment networks are accepted just about everywhere. With the other major payment networks, however, there’s a chance that you’ll run into a retailer or service provider that doesn’t accept them.
Credit card benefits
If you’re a Visa or Mastercard credit card owner, you will enjoy built-in perks beyond the benefits, interest rates, terms, and features that your card issuer sets. Both Visa and Mastercard offer an identity theft protection benefit, for example. Additionally, Visa has ID Navigator Powered by NortonLifeLock, and Mastercard has its own Mastercard ID Theft Protection.
Commitment to secure payments
As payment networks, Visa and Mastercard both use multilayered approaches to protect consumer data. For example, tokenization replaces your actual card number with a unique digital code. This protects your account information from mid-transaction theft.
Differences between Visa and Mastercard
Visa and Mastercard are more alike than not, but there are some variations, mostly concerning the benefits their cards provide. So, what’s the difference between Mastercard and Visa?
At the base level, Visa Traditional offers perks like pay-per-use 24/7 roadside assistance, Dovly Uplift, a free credit monitoring program, and emergency card replacement that you can receive within 24 to 72 hours. Mastercard Standard, however, only offers ID theft protection. This gives Visa cards a slight edge when it comes to entry-level card perks.
If you have a strong credit score and want to obtain higher-tier Visa or Mastercard cards, both have a collection of benefits such as luxury hotel partners and concierge services. But there are some unique benefits to compare as well. In general, Visa’s higher-level cards offer travel-related benefits and consumer protections, while Mastercard is more focused on granting access to exclusive experiences and hands-on customer service.
Examples of Visa Signature and Visa Infinite card offerings:
- Rebates for air travel costs such as accelerated airport security, Priority Pass airport lounge access, checked-luggage, charges, and in-flight purchases
- Extended warranty protection
- Lost luggage reimbursement
- Trip delay, trip cancellation, or trip interruption reimbursement
- Travel accident insurance, emergency assistance, and emergency evacuation benefits
- A statement credit for Global Entry
Examples of World and World Elite Mastercard benefits:
- Discounts on Lyft, DoorDash, and ShopRunner
- Partner hotels that offer free nights
- Car rental status upgrades
- Golf concierge
- Priceless Experiences, which are exclusive events in culture, dining, sports, and entertainment
- Complimentary 24/7 concierge service
There are other perks and benefits that you can access through Visa or Mastercard network, but the most important point to remember is that it’s the credit card issuers that set up the rewards programs and the suite of perks that set their offers apart. So you could end up with perks like purchase protection or a rental car collision damage waiver regardless of whether you have a Visa or Mastercard.
You can’t go wrong with either type of card
The bottom line is that when comparing credit cards, whether they have a Visa or Mastercard logo really won’t matter to you all that much. There may be slightly different benefits, but as mentioned, they’re very minimal. In either case, you’ll be able to count on the fact that millions of retailers and service providers will accept your card.
