Features & Similarities of Visa & Mastercard

Table of Contents
1. Introduction
2. Visa Card
3. Mastercard
4. Features and Similarities of Visa and Mastercard
5. How the Networks Make Money
6. How a Card Transaction Works
7. Key Terms
8. Cardholders and Merchants
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Introduction

Both Visa and Mastercard are global payment-network organisations that provide technology, rules and networks for processing card payments. They act as intermediaries between card-issuing banks, acquiring banks and merchants to enable electronic payments worldwide. The card networks do not normally issue cards directly to consumers; instead they partner with banks and other financial institutions which issue cards and set customer pricing and terms.

Visa Card

Visa is a global payments technology company. Its roots trace to the launch of the BankAmericard programme in 1958; the Visa brand later emerged from that origin. Visa Inc. is headquartered in California, USA, and provides the network and processing technology that connects issuing banks, acquiring banks and merchants.

• Role: Provides the payment network, transaction rules, authorisation and settlement services.
• Origin and headquarters: Originated from BankAmericard (1958); Visa Inc. is based in California, USA.
• Products: Supports credit cards, debit cards and prepaid cards offered by partner banks and institutions under their own brand names.
• Relationship with banks: Works with banks and non-bank financial institutions that issue cards and determine customer charges such as interest and annual fees.
• Revenue sources: Earns fees from banks and acquirers for use of its processing network and value-added services.

Mastercard

Mastercard is a multinational payments technology company that began in 1966 as the Interbank Card Association (later called Master Charge). Mastercard operates a global card processing network and provides payment products and services to banks and payment service providers.

• Role: Operates the network and processing infrastructure for card payments, authorisations and clearing.
• Origin and headquarters: Began in 1966 as Interbank/Master Charge; the company is headquartered in New York, USA.
• Products: Supports debit cards, credit cards, prepaid cards and other payment instruments issued by partner banks.
• Customer contact: Does not usually issue cards directly to retail customers; the issuing banks handle customer relationships and pricing.

Features and Similarities of Visa and Mastercard

• Common function: Both provide global card-payment networks that enable electronic payments between merchants and cardholders through issuing and acquiring banks.
• Contactless and digital payments: Both support contactless payments (tap-to-pay), EMV chip technology, tokenisation for mobile wallets and other secure online payment methods.
• Card variations: Both networks support a range of card products issued by banks, including standard, premium, platinum and signature cards, with differing benefits and fees determined by the issuer.
• Merchant and cardholder services: Both offer value-added services such as global customer assistance, travel and shopping benefits, merchant offers and partner discounts; specific offers vary by issuing bank and card tier.
• Security: Both implement transaction security standards and fraud-prevention tools to protect online and in-store transactions.
• Intermediary role: Neither network typically sets card interest rates or most customer fees; those are set by issuing banks. The networks set rules, technical standards and charge processing fees to participants.

How the Networks Make Money

• Network and processing fees: Visa and Mastercard charge banks and acquirers for access to their processing networks, authorisation services and clearing infrastructure.
• Interchange and settlement fees: While interchange fees are paid between banks (issuer to acquirer) and are often set in consultation with market practices and rules, networks collect various settlement and scheme fees related to transaction processing.
• Cross-border and currency fees: Networks and their partners charge fees for international transactions and currency conversion; these may include network cross-border fees in addition to issuer/merchant charges.
• Value-added services: Additional revenue comes from services such as fraud prevention, data analytics, tokenisation, loyalty platforms and commercial payments solutions.

How a Card Transaction Works

• Customer pays merchant: Cardholder presents card or mobile wallet at merchant terminal for purchase.
• Merchant forwards request: Merchant's acquiring bank sends an authorisation request, via the card network, to the card issuer.
• Issuer authorises: Issuing bank checks funds, fraud signals and card status and returns an authorisation or decline through the network to the merchant.
• Clearing and settlement: After authorisation, transactions are cleared and settled between acquirer and issuer through the network's clearing processes; fees (interchange, scheme fees) are applied during settlement.

Key Terms

• Issuer: Bank or financial institution that issues the card to the customer and sets customer fees and credit terms.
• Acquirer: Bank or payment processor that provides payment services to merchants and receives card transactions from them.
• Card network / scheme: Organisation (Visa or Mastercard) that provides the rules, infrastructure and switching required for transactions between issuers and acquirers.
• Interchange fee: Fee paid by the acquiring bank to the issuing bank as part of card transaction settlement.
• Merchant Discount Rate (MDR): Fee charged to merchants by acquirers for card acceptance; it includes components for interchange, network and acquirer margin.

Cardholders and Merchants

• Cardholder protections: Purchase protection, dispute processes and fraud liability rules are provided through networks and issuers; exact protections depend on card terms and local regulations.
• Choosing a card: Compare issuer fees, interest rates, reward programmes and merchant acceptance rather than the network name alone; both Visa and Mastercard are widely accepted globally.
• For merchants: Acceptance of both networks increases customer convenience; merchants should compare acquirer fees and the overall cost (MDR) when selecting providers.

Visa and Mastercard are payment-network organisations that enable secure, global card transactions by providing processing, rules and value-added services. They partner with issuing and acquiring banks, which issue cards and set customer pricing. Both networks offer similar technology, security features and product tiers; their revenues come from network fees, cross-border charges and additional services.