Visa vs. Mastercard: What’s the difference?

So you’ve decided you want to open a new credit card. But how do you decide which card is right for you?

There are many options when it comes to selecting a credit card, but one option people tend to overlook is which network the card belongs to. Visa and Mastercard are two of the biggest credit card networks in the U.S. You’re probably familiar with both names, but what exactly are they — and how do they differ? Let’s take a look.

• What is a credit card network?
• How did Visa and Mastercard conquer the credit industry?
• Visa vs. Mastercard: Which is better?
• What other options do you have?

Let’s start with the basics: What is a credit card network?

As we noted in our article on credit card companies, there are two main players in the credit card industry: credit card issuers and credit card networks.

Credit card issuers, like Chase and Citi, approve your credit card application, set your credit limit and interest rates, and take your monthly payments. They also offer rewards and perks that vary depending on the card.

Credit card networks, on the other hand, authorize and process the transactions you make with your card. These payment networks essentially connect cardholders with merchants and banks, allowing for a seamless experience when you use your card at a merchant that accepts it.

Credit card networks include Visa and Mastercard. Interestingly, Discover and American Express are combination companies that issue cards and have their own transaction networks. This article will focus on Visa and Mastercard, since they are the largest networks in the world.

How did Visa and Mastercard conquer the credit industry?

In 1958, Bank of America launched BankAmericard® credit card, the first consumer credit card with a “revolving credit” feature, giving the cardholder the option to either pay off their balance in full at the end of each billing cycle or carry a balance from month to month. This is generally how unsecured credit cards work today.

Bank of America joined with other issuing banks to create National BankAmericard Incorporated. After expanding internationally, BankAmericard decided to change its name to Visa. Today, Visa operates in more than 200 countries and territories. At the end of 2016, there were more than 3 billion Visa cards around the world and about 44 million merchants who would accept them.

Mastercard was the brainchild of a group of banks that came together to form the Interbank Card Association in 1966. It didn’t acquire the name Mastercard until 1979, but it has since expanded to make up a significant share of the U.S. market. Today Mastercard offers many different types of credit cards, and these cards are accepted in more than 210 countries and territories around the world.

With size comes increased capabilities and resources. Merchants and consumers seeking benefits such as purchase protection, zero liability for unauthorized charges and (perhaps most of all) convenience thus tend to gravitate toward Visa and Mastercard.

Visa vs. Mastercard: Which is better?

That’s not necessarily an easy question to answer. Both credit card networks offer wide acceptance and competitive benefits, but let’s try to break it down a bit.

Acceptance

There may be a few significant differences between Visa and Mastercard, but acceptance isn’t one of them. Both cards are widely accepted in the U.S. and in more than 200 countries and territories globally.

Even though both cards are accepted around the world, some banks and countries will occasionally strike up exclusive product partnerships with one or the other. For example, in 2015 National Australia Bank announced a 10-year exclusive contract with Visa.

The good news is that these types of partnerships typically don’t affect your ability to use either type of cards with merchants. Both Visa and Mastercard are widely accepted in Australia.

Technology

When it comes to tech, you won’t find a yawning gap between these two companies. Both continue to innovate new technologies such as contactless payment, more commonly known as “tap and pay.”

Both companies also emphasize security in online shopping, with technologies designed to promote safe online transactions.

Verified by Visa works behind the scenes when you shop online to sniff out when you might not be the one making the purchase. If you use a new device or make an especially large purchase, you may be asked to provide more information to confirm that purchase.

Similarly, Mastercard SecureCode® generates a private code for your Mastercard account to use when online shopping. Though it works slightly differently than Verified by Visa, both technologies offer an additional layer of security at checkout.

Cardholder benefits

Visa and Mastercard vary slightly in the benefits they offer cardholders.

What really matters, however, is which kind of Visa or Mastercard credit card you apply for. Each company offers several tiers of credit cards, with benefits that get more impressive as the tiers ascend.

Here’s a basic breakdown of each company’s tiers based on a few of their cards. Note that the list of benefits for each card below is not exhaustive, but it should give you a good idea of what each tier offers.

The verdict

When deciding on a credit card, look at each card individually. Determine which benefits, interest rates and rewards are most beneficial to you, and base your decision on those factors — consider the payment network after that.

If you’re still unsure about which network is right for you, you may want to start with our lists of the best Visa credit cards and the best Mastercard credit cards.

What other options do you have?

As we mentioned above, Visa and Mastercard are credit card networks that don’t issue their own credit cards.

Other credit card companies, such as American Express and Discover, issue credit cards and operate payment networks. Both of these companies can offer specific benefits or perks on their cards, and sometimes have exclusive affiliations with particular merchants. Because of the way American Express and Discover operate their payment networks, these credit cards aren’t as globally accepted.

How do I choose the best card for me?

Think about where you spend your money. You want a card that complements your spending habits and rewards you for your financial choices. If you plan on carrying a balance (which we don’t recommend), you’ll also want to steer clear of credit cards with high interest rates.

Bottom line

Visa and Mastercard both have a lot going for them. Each offers advanced payment technology, security features while online shopping, and high global acceptance rates.

So what’s a responsible credit card shopper to do? Instead of focusing on Visa vs. Mastercard, focus on the benefits associated with individual cards.

If you start by determining the type of rewards you prefer and the interest rates you can live with, you should be able to find the right card for your wallet.

*Approval Odds are not a guarantee of approval. Credit Karma determines Approval Odds by comparing your credit profile to other Credit Karma members who were approved for the card shown, or whether you meet certain criteria determined by the lender. Of course, there’s no such thing as a sure thing, but knowing your Approval Odds may help you narrow down your choices. For example, you may not be approved because you don’t meet the lender’s “ability to pay standard” after they verify your income and employment; or, you already have the maximum number of accounts with that specific lender.