Mastercard vs Visa: A Comparison for 2021
While many people think of Visa and Mastercard as credit card issuers, they also operate payment networks, and it’s the major financial institutions that issue co-branded Visa and Mastercard credit and debit cards.
This comparison by Wealth Rocket focuses primarily on two titans of the financial world: Mastercard vs Visa.
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Mastercard Review 2021
Mastercard is a global payment network operator founded in 1966 and is based in the aptly named Purchase, New York.
The December 2020 edition of the Nilson Report, which provides analysis of the global card and mobile payment industry, notes that Mastercard is widely accepted in over 70 million locations.
Mastercard’s annual report mentions that the company enables transactions in more than 210 countries and territories.
It also reiterates that it does not issue cards, offer credit, or determine the interest rate and annual fees on credit cards issued by financial institutions.
How Does Mastercard Work?
When you make a purchase, there are usually five participants involved in the transaction: you, the merchant, the card issuer, the acquirer (also called the merchant bank), and Mastercard.
And there are usually six steps involved in the payment process for Mastercard:
- You make a purchase
- The merchant sends your information to the acquirer
- The acquirer asks Mastercard to get the issuer to authorize the transaction
- Mastercard requests authorization from the issuer
- The issuer authorizes the transaction and sends the response to the merchant
- The issuer sends the payment to the acquirer who then pays the merchant
Features of Mastercard
There are many different types of credit cards available under the Mastercard name. These include rewards credit cards, balance transfer cards, and cashback cards.
Two of the more popular cards are the World and the World Elite, which include additional benefits not offered by your credit card issuer.
For instance, you can get free access to Boingo Wi-Fi (available in more than one million places worldwide).
Although the Mastercard World and World Elite cards don’t offer travel insurance, they do offer airport lounge access, purchase protection, rental car insurance, and much more.
Certain exclusions and terms and conditions apply so be sure to check with your financial institution to see what the card offers.
While there are typically no income requirements for a World Mastercard, the minimum income requirement for World Elite Mastercards is $80,000 a year with the annual fees ranging from $0 (PC Financial and Triangle) to $150 (BMO).
Mastercard Pros & Cons
There aren’t many disadvantages with using Mastercard because of how widely accepted it is and the benefits that come with it. Here’s a list of the pros and cons.
Pros: The Good Stuff
Widely accepted around the world
Various perks such as access to Boingo Wireless Hotspots
Cons: The Not So Good Stuff
Many of the travel-related benefits that come with World Elite cards aren’t as useful now due to the pandemic
Overview of Visa
Visa is a San Francisco–based digital payment network operator that was founded in 1958.
Just like Mastercard, the Nilson Report’s December 2020 edition notes that Visa is accepted in 70 million locations around the world.
In its 2020 annual report, Visa announces that it facilitates payments in more than 200 countries and territories (slightly less than Mastercard’s 210).
Visa also notes that it’s not a financial institution, nor does it issue cards, extend credit, or set fees and rates for Visa product account holders.
How Does Visa Work?
Like Mastercard, there are five key players in the transaction process when using a Visa card: you, the merchant, the acquirer, the card issuer, and Visa.
Visa provides a simple example of how a transaction works through its payment network:
- You make a purchase
- The acquirer reimburses the merchant for the purchase
- The issuer reimburses the acquirer within one or two days
- The issuer collects the funds from you
Features of Visa
There are a number of different types of co-branded Visa cards, the common ones being Visa Classic, Visa Gold, and Visa Platinum. The benefits of these are very basic compared to the Visa Infinite cards.
Some of the travel and lifestyle offers, experiences, and events that you could get with a Visa Infinite card have been put on hold due to the pandemic. When it’s safe to resume traveling, though, you can get deals at more than 900 hotels that are part of the Visa Infinite Luxury Hotel Collection.
There are still some offers available if you don’t plan on traveling this year. The concierge services are helpful when looking for something to do or if you’re looking for difficult-to-find essential items during the pandemic.
Visa Infinite Privilege cardholders get the same benefits plus membership and six free visits to Priority Pass airport lounges, a security fast-track lane at select Canadian airports, and discounts for airport parking and valet services.
Most Visa Infinite cards have a minimum income requirement of $60,000 a year and an annual fee of $120 to $139.
In contrast, Visa Infinite Privilege cards typically have a minimum income requirement of $150,000 a year and an annual fee of $245 to $599.
Visa Pros & Cons
It can be a tough choice deciding whether to go with Visa or Mastercard. Here are the pros and cons of Visa to help you make up your mind.
Pros: The Good Stuff
Widely accepted in Canada and around the world
Good travel benefits with the Visa Infinite card
Cons: The Not So Good Stuff
The difference in benefits: Airport lounge access is only available with a Visa Infinite Privilege card but the minimum income requirement is $150,000, whereas it is available with a Mastercard World Elite card but the minimum income requirement is only $80,000
Our Final Thoughts
When it comes down to Mastercard vs Visa in Canada, there are a variety of co-branded cards offering a number of great benefits.
The two payment network operators have many similarities, so it isn’t just a case of which is better.
Deciding which card is best for you will depend on what rewards program most suits your wants and needs, as well as your spending habits.
That said, whether you choose Mastercard or Visa doesn’t matter as much as the credit card you end up choosing.
Frequently Asked Questions
There are some differences between Mastercard and Visa.
First of all, they are two separate companies operating payment networks that allow transactions between different participants to run smoothly.
There are also benefits that come with certain types of Mastercard and Visa cards.
Mastercard, for example, has its World and World Elite cards that offer greater benefits than regular cards. These cards may provide purchase protection, car rental insurance, special offers, and access to airport lounges.
The Visa Infinite and Visa Infinite Privilege cards also come with benefits. There are a number of offers related to food and wine, travel, entertainment, retail, and sports. There’s also a free concierge service available 24/7 that can help you plan a trip, for example, or make a restaurant reservation.
Here are some quick facts:
- Visa and Mastercard are each accepted by 70 million merchants, according to the December 2020 Nilson Report.
- According to their 2020 annual reports, Visa facilitates transactions in more than 200 countries and territories, while Mastercard enables transactions in more than 210.
Worldwide, Mastercard is accepted in slightly more countries and territories than Visa. In Canada, Visa and Mastercard are usually accepted at most stores that take credit cards.
There are a number of payment options, with American Express being one of the largest besides Visa and Mastercard.
Unlike the main two, American Express issues its own credit cards (while also operating a payment network), although Scotiabank does offer some co-branded cards too.
Unlike credit cards, American Express also offers charge cards that have no pre-set spending limit — but that doesn’t mean you can spend as much as you want.
Debit is another alternative, especially where credit cards aren’t accepted. Money is taken directly out of your account and you won’t have to worry about paying a bill later.
PayPal, which offers purchase protection, is a different payment option that some online retailers accept. However, neither debit nor PayPal have the perks that credit cards do.