Visa vs. Mastercard: Key Similarities and Differences

Credit cards change the way we shop. With that little piece of plastic in your pocket, shopping feels safer because you skip carrying cash. Plus, buying goods and services online is so much easier on credit.

But not all credit cards are equal. Even Mastercard and Visa, two of the most widely accepted electronic payment processors around the globe, can be different. So, before you choose your next credit card, take the time to understand the key similarities and differences between Visa and Mastercard.

Visa is one of the four major credit card networks in the world. Through its Visa network, the company supports payments between consumers and merchants. Unlike credit card providers, Visa does not extend credit or issue cards.

Visa was introduced in 1958 by Bank of America. Through its Visa BankAmericard product, Bank of America was looking to provide one universal credit card that many vendors could use. Before that time, each vendor had its own credit card product, making it cumbersome for consumers to stay on top of their bills and keep track of their accounts.

While Visa BankAmericard faced early challenges with fraudulent activity and defaulted payments, the program succeeded over time. However, keeping Visa under Bank of America caused issues when rolling out the program across multiple states and banks. In 1970, Visa BankAmericard transferred under a group of member banks, which later formed the National BankAmericard Association.

Visa underwent a few critical steps as it grew. In 1975, the First National Bank of Seattle issued the first Visa debit card. In 1976, Visa began its trek for international acceptance. To best prepare for this step, the BankAmericard name was officially changed to Visa.

Like Visa, Mastercard processes payments between consumers and merchants. Mastercard does not issue credit cards or extend credit to customers. Instead, the company works with financial institutions, travel companies, hotels and other retailers who extend credit using the Mastercard logo.

Mastercard hit the market in 1966 in response to the success of BankAmericard. A group of regional banks, which became known as Interbank, first issued Mastercard. This banking association allowed member banks to consolidate their client base and create a network to facilitate transactions.

Mastercard expanded into Asia and Latin America during the 1980s. Beyond this, the company achieved a few international firsts, as it became the first credit card issued in the People’s Republic of China in 1987. The following year, the Soviet Union received its first Mastercard.

Like Visa, Mastercard also incorporated ATM and debit cards into its mix. The company acquired Cirrus ATM services in 1985. Mastercard created Maestro, the first online point-of-sale debit network, through this acquisition in 1991.

Over time, Mastercard expanded its services beyond credit to offer debit and prepaid cards. The card is accepted in over 210 countries, with over 125 billion credit and cash transactions processed during one year. 

Visa and Mastercard are two of the most commonly known names in the credit card industry. Although you will find many similarities between Mastercard and Visa, there are some marked differences between the payment processors. 

Mastercard and Visa cards are reasonably similar as they rank among the top electronic payment processors. Both electronic payment processors are widely accepted around the globe. 

Neither payment processing company extends credit or issues cards. Instead, both Mastercard and Visa rely on relationships with financial institutions, retailers, travel companies and hotels that issue credit cards. Even though you may use a card with a Mastercard or Visa logo, you will also see branding from the card issuer. 

Depending on the card type, you could take advantage of such perks as cash-back bonuses, travel rewards and roadside assistance. When appropriately reported, you can have zero liability for fraudulent activity on your Visa or Mastercard account. 

Despite their similarities, you will find differences between Mastercard and Visa.

Both payment processors are globally accepted. However, Visa processes twice as many credit and cash transactions as Mastercard. Over 12 months, Visa processed over 276 billion credit and cash transactions, compared with 125 billion transactions run by Mastercard.

Over 200 countries accept both Mastercard and Visa. However, users may encounter limitations when using their Mastercard. One notable restriction is Costco. Given its contract with Visa, Costco only accepts Visa inside its stores. Although you can use a Mastercard to purchase goods and services online, you cannot use your Mastercard in the store.

Other key differences come down to the features and benefits offered by Mastercard and Visa. While Visa and Mastercard have a standard set of cards with comparable features, these benefits can vary based on the bank issuing the credit card. You may find credit cards that offer no minimum fee, pay extra cash rewards on certain purchases or provide low short-term interest rates.

The functionality and usability are relatively similar between Mastercard and Visa, so choosing the right credit card comes down to the features, bonuses and perks you value the most. Most cards have different pros and cons and may focus on offering perks for different audiences. 

For example, you may choose a card that offers travel insurance or bumps up the cash you earn on hotel or airfare if you travel frequently. Or, if you are looking to transfer your balance, plenty of cards offer an incentive no-interest period. While you may have to pay a transfer fee, you could still save money if you carry credit card balances with high annual percentage rates (APRs).

If your credit score needs a boost, some financial institutions issue cards without a credit check. While you may need to put money down, you could find a credit card that does not require a security deposit. 

Mastercard and Visa are well-known payment processors that make sure your credit card transactions are completed. Mastercard and Visa are accepted in over 200 countries and offer fraud protection if your card is lost or stolen.

To find the best Mastercard or Visa to fit your lifestyle, take the time to read and understand the credit card agreement. Before you accept, review the features and benefits of each credit card to find the one that works well with your life.