Difference Between Mastercard & Visa
- Visa began in 1958 as Bank Americard. Originally issued by Bank of America to 60,000 households in Fresno, California, it quickly became a success and expanded nationwide. Bank of America then created National Bankamericard Inc. and licensed its product to other banks across the country. In 1976, National Bankamericard changed its name to VISA.
Aware of the success of Bank Americard, a group of competing banks formed the Interbank Card Association in 1966 and licensed the name Master Charge from the First National Bank of Louisville. KY. Over time, their organization grew, and in 1979 it was renamed Mastercard International. Prior to 1970, one bank could not issue both Mastercard and Visa cards. However, in that year, the associations changed their rules and permitted banks to issue both brands. - Visa is by far the larger brand both in the the United States and worldwide. As of June 20, 2009, 318 million VISA credit cards and 220 million Mastercard credit cards were issued in the United States.
VISA cards account for 47 percent of the outstanding balances on general purpose credit cards in the U.S., while Mastercard accounts for 35 percent. Worldwide, VISA represents more than 60 percent of the purchase volume on general purpose cards, while Mastercard accounts for about 28 percent. In terms of market capitalization, VISA is more than twice the size of Mastercard, with about $77 billion in market cap in 2008 to Mastercard's $35 billion. - The typical consumer sees little difference in the two cards, especially in the United States. Since the issuing banks, not the national organizations, determine the pricing, credit policies and benefits offered on their cards, and many offer both brands, the real differences are between the individual issuers and not between the two brands of cards. Virtually all merchants in the United States who accept one brand will also accept the other, and you can probably count on one hand the number of places where you can't use either one.
- Worldwide, VISA's market share is more than double that of Mastercard's, at 60 percent to 28 percent, so you're probably better off with a Visa overseas. You may be best off carrying both cards however, especially if you plan to use ATMs for cash. In the United States, most banks are members of both the VISA and Mastercard ATM networks, however, overseas it's much more common to find ATM's where you can get cash on one card but not the other.
- If you're thinking about investing in Mastercard or Visa, you may want to take some advice from Morgan Housel, a writer for the respected financial website "The Motley Fool."
"Visa is more than twice the size of Mastercard in terms of market cap," he wrote in 2008. "Both have healthy profits. Both trade at relatively high multiples to expected earnings. Looking for a distinction between the two? At this vantage point, we might be able to come up with one hazy assertion: Mastercard is smaller, so its prospects for growth--all else being equal--might be better than Visa's."
