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Visa vs. Mastercard: What are the differences (and do they really matter)?

June 18, 2020 Keph Senett
Visa vs. Mastercard: What are the differences (and do they really matter)?

Photo by Mike Petrucci on Unsplash

A frequent question we hear at MoneySense is: Which is better—Visa or Mastercard? When looking for a credit card, there are all sorts of things to consider. What is the interest rate? Can you collect rewards points or get cash back for making purchases? Is there a bonus for signing up, and what are the perks and benefits included? Believe it or not, the answer to these questions is likely not going to depend on whether you go with a Visa or Mastercard. In this article, we’ll lay out the facts and show you why the badge on your plastic probably doesn’t matter.

Mastercard vs. Visa: Overview

1. Visa and Mastercard don’t issue their own credit cards

It might seem counterintuitive, but neither Visa nor Mastercard directly distribute credit cards. Both of these companies are processing networks that partner with card issuers like banks, credit unions, or other financial institutions to get their cards to the public. And it’s the actual card issuer, not the processing network, that sets most of the terms like interest rates, rewards and annual fees.

2. Visa and Mastercard are processing networks

As processing networks, both Visa and Mastercard handle a lot of the behind-the-scenes work that allows your payments to be processed. In other words, these companies provide the technologies and networks that power your transactions. When you make a payment against your credit card balance, you are not paying either Visa or Mastercard directly—you’re paying the card issuer.

3. Both are widely accepted

Visa and Mastercard are both widely accepted at Canadian retailers, with a few exceptions.

4. Whether a credit card is a Visa or Mastercard really shouldn’t impact your choice

In the vast majority of cases, the processor—Visa or Mastercard—is immaterial to your choice of a credit card. Your best practice is to compare each credit card option on its own merit, paying attention to details like interest rate, rewards or cash back, welcome bonus and additional perks. From there, you should choose the credit card that best aligns with your particular spending habits, and offers benefits you will use. This selection process can be extended to financial institutions as well. The best choice for you may well come from a bank, credit union, or possibly even a retailer, and you should be open to all of these card options even if you don’t hold any other accounts with that lender.

Compare the best credit cards in Canada for 2020*

Mastercard vs. Visa: What are the differences?

The differences between Visa and Mastercard are negligible and likely won’t make or break your decision about which card to use. However, there are a few slight distinctions readers should know about.

1. Acceptance

The vast majority of Canadian retailers accept both Visa and Mastercard. That said, Costco and No-Frills are two notable exceptions, accepting Mastercard only for their credit card payments. If you shop regularly at either of these retailers, you might want to consider carrying a Mastercard.

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