Dueling it Out – Visa vs. MasterCard


When considering the battle of Visa versus MasterCard, there is the view of the consumer who uses the credit card accounts and the view of those who invest in the lending banks through stock purchases.

The Credit Card Accountability Responsibility and Disclosure Act (CARD) was put into law in February, 2010. The new laws were meant to protect consumers from the increasing predatory terms and fees of companies offering both Visa and MasterCard.

Prior to those laws, the Visa versus MasterCard debate was mainly one of opinion or preference. The regulations to protect consumers hit the credit industry hard.

In fact, in the past two years the Visa versus MasterCard battle has been a battle of credit card providers to maintain profitability rather than a focus on branding.

Economy and Unemployment

An economy in stress and rising unemployment numbers were a crisis for the credit industry. Consumers began to rapidly pay down credit card debt as they feared a long term recession or looming depression. This reduced the income of banks that rely on the monthly interest paid on those debts.

Other consumers were unable to pay even the minimum on credit cards. They defaulted in large numbers or dismissed debt through filing personal bankruptcy. As credit lender profits disappears, credit card offers also were put on hold.

For several months, even major banks offering both Visa and MasterCard removed the majority of their credit offers.

For investors, shares in Visa and MasterCard have been a choice between growth and value. Visa is predicted to grow faster than MasterCard in the next 2-3 years while MasterCard is viewed by market analysts as providing the best value for investment dollars.

Understanding

When you apply for a credit card you may be given the choice of Visa or the MasterCard. What you may not know is that neither Visa nor MasterCard issues that new account to you.

MasterCard and Visa make profits because they process the transactions on your card from the purchase you make at the store to the charge applied at your lending bank.

If wondering about the bonuses of Visa or the MasterCard, you should know these names have nothing to do with the rewards or bonuses attached to your new credit card.

These are third party networks designed to facilitate the financial transactions associated with your credit card. The logos are not concerned with your interest rate, fees, customer service or other issues directly involved with your personal credit card.

Protections Offered

The important of these networks can be found in the protections offered to consumers. While the merchant or bank issuing the credit card provides the rewards program or points, Visa and MasterCard provide the fraud protection, return guarantees, purchase protection, concierge services, etc.

Other areas where Visa and MasterCard provide benefits are car rental insurance, premium travel insurance. Visa seems to be slightly higher on the consumer protection scale than MasterCard due to the Loss of Use coverage offering by Visa.

Also, Visa protections are applied over a wide range of their credit card accounts while MasterCard special benefits are often limited to only top consumer credit accounts.

Which Should You Choose?

If you live in the US, your choice can be made on your preference of which logo you think is most attractive. It doesn’t matter whether you pick Visa or MasterCard as both providers are accepted almost anywhere you might need to use them.

Visa is almost double the size of MasterCard in the investor marketplace yet in 2009 the number of consumers with Visa cards was only 25% higher than for MasterCard users.

Visa has three times as many debit card users and overall wins when looking at size of the companies.

MasterCard has chosen to aggressively pursue the market of labeled credit cards and has greatly expanded the number of branded cards it offers through leading websites, retails stores and manufacturers.

Summary

The battle of Visa and MasterCard may rage on Wall Street for years to come. However, for the consumer the choice of Visa or MasterCard is not important.

Choose the credit card offer that has the benefits, rewards and terms that suit your financial needs no matter which logo is attached to the account.