Here’s the distinction, and why it matters.
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In the realm of credit cards, two names tend to stick out among all others: Visa and MasterCard.
Both are so ubiquitous that you may wonder why some cards have a Visa logo while others have a MasterCard logo, yet both seem to be accepted by the same merchants, who may not accept, say, American Express or Discover. Spoiler alert: There are, in fact, only marginal differences between Visa and MasterCard. That said, it can be valuable to know what makes them different from other cards.
If you thought they were banks, well, think again. Both Visa and MasterCard are connection networks that process payments between merchants and the card issuers (these are the banks or credit unions) by forwarding payment information and authorization between the cardholder, merchants, and the issuer. Card issuers—such as Citibank, Capital One, Chase, and others—work in conjunction with Visa and MasterCard to receive payment, which is why your card might bear both a Capital One and MasterCard logo or a Chase and Visa logo.
“The issuer is the one that gave out the card, so when you pay your bill you’re paying it,” says Beverly Harzog, a credit card expert and consumer finance analyst for U.S. News & World Report. “Visa and MasterCard are the ones that have the payment network. They make sure the transaction happens, so they’re kind of the behind-the-scenes players.”
Conversely, Discover and American Express are both a payment network and issuer combined. They aren’t as widely accepted as other cards, however, because they charge higher processing fees than Visa and MasterCard. For that reason, Harzog suggests even die-hard AmEx or Discover card users have a Visa or MasterCard as backup, especially when traveling overseas.
In most cases, Visa and MasterCard are interchangeable when it comes to usage—if one place accepts MasterCard, it’ll accept Visa, too (and vice versa). Both are accepted in 10.7 million businesses in the United States and 200 international countires and territories, according to WalletHub.
The main obstacle with a MasterCard could come in the form of retailer-specific cards. For example, before 2016, Costco only accepted American Express; now it has a deal with Visa that allows members to use any Visa card, including (but not exclusively) the Costco Anywhere card.
Many other retailers have exclusive deals with card networks, where in most cases, you can only use the card at the individual store, whether it’s a Visa or MasterCard. Visa carries exclusive cards for Nordstrom, Gap, Starbucks, and Amazon Prime (though you can use Amazon’s anywhere Visa and MasterCard are accepted). MasterCard carries cards for Target, TJ Maxx, Sam’s Club, Walmart, and Bed Bath & Beyond.
Visa and MasterCard share several built-in benefits, including lost or stolen card reporting, emergency card replacement, rental auto protection, and zero liability protection, which means you won’t be held responsible for unauthorized purchases made with your account. (Other credit card networks offer these things as well.) That said, your card’s specific benefits are sanctioned by the issuer, not the payment network, so you’ll want to pay attention to the information that goes along with your specific card.
Regardless of the network it’s on, your credit card will have at least one clear benefit: building credit. “Whether it’s MasterCard or Visa, as long as it’s a credit card and you use it responsibly, you’ll be able to build credit and improve your credit score,” says Harzog. That is, as long as what you’re using is a credit card, not a debit card or gift card. “People sometimes get confused because they see a MasterCard or Visa logo on a debit card and think it’s the same as using a credit card. But you cannot build credit with a debit card,” Harzog says.
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