Visa vs. Mastercard: Which Should You Use for Online Shopping?
Be honest, when was the last time you stopped to think about the payment network you use?
Visa and Mastercard are both ubiquitous in our day-to-day lives, but they have some important differences that you should be aware of—especially when it comes to online shopping. Keep reading to learn more.
What Are Visa and Mastercard?
In simple terms, Visa and Mastercard are both payment networks. It’s an important fact to understand; a common misconception is that the two companies issue their own debit and credit cards.
In practice, it’s your bank or lending group that’s issuing the cards. They are responsible for performing credit checks, setting interest rates, establishing usage fees, offering perks, and so on. Visa and Mastercard simply authorize and facilitate purchases—they are in charge of coordinating and processing the transfer of money between your bank account and the merchant (online seller).
Indeed, it was the need for a single payment processing network that gave rise to both companies. In the 1950s, people had to carry an array of cards, often needing a separate card for each merchant.
Bank of America’s BankAmericard (the forerunner to Visa) went live in Fresno in 1958. The precursor to Mastercard (called Master Charge) was the brainchild of United California, Wells Fargo, Crocker National Bank, and Union Bank of California. It went live in 1966.
Visa is the larger of the two networks. It controls 48.5 percent of the global market. Mastercard has a market share of 31.7 percent. The remaining 20 percent is made up of smaller operators like American Express and Discover.
Visa and Mastercard both process around 1,700 transactions per second (tps). The companies’ technology has a theoretical limit of 56,000 tps when stress tested. For comparison, Paypal has a limit of around 200 tps (remember, PayPal offers its own credit card ). Bitcoin has a limit of a mere seven tps.
Bottom line: You’re extremely unlikely to ever run into issues, and it should not form part of your decision.
Acceptance of Visa and Mastercard
When you’re shopping online, there are arguably two features which are more important than anything else: acceptance and security. We’ll look at security shortly; for now, let’s focus on acceptance.
It’s fair to say that Visa and Mastercard are both widely accepted. In the United States, you’ll struggle to find any retailers that don’t accept both networks.
Nonetheless, there are some exceptions. One of the most notable examples is Costco. In the U.S., the retail giant only accepts Visa credit cards. Conversely, in Canada, it only accepts Mastercard credit cards. The company accepts debit cards on both networks.
It seems odd, but there’s a good reason for Costco’s decision. Visa and Mastercard both charge online stores a “swipe fee.” Typically, the fee is around three percent. However, by negotiating exclusive terms with Visa, Costco was able to reduce the fee to about 0.5 percent.
The company could then pass those savings on to its customers. Some smaller online retailers have taken a similar approach.
You might also run into issues when one of the networks sponsors a major event. For example, Visa has been a sponsor of the Olympics since the late 1980s. As a result, you cannot use Mastercard if you want to buy Olympic merchandise from the official online store.
It is the same story for the FIFA World Cup in soccer, the Rugby World Cup, and some music concerts.
International Online Shopping
Locally, Visa and Mastercard operate in just about every country in the world. However, both companies also have restricted lists.
As the time of writing, all transactions are blocked in Zimbabwe, Sudan, Somalia, North Korea, Iran, Cuba, Congo, and the Ivory Coast.
In addition to the blocked list, some countries block transactions on debit cards if you are not present in person. In theory, the measures are in place for fraud prevention. For online shoppers using international shopping sites, that can be a problem.
If you have a Visa or Mastercard debit card from an American institution, you will not be able to use it with vendors domiciled in much of Europe (including the U.K.), South America, and Asia.
Finally, you might experience acceptance issues from vendors that want to remain anonymous. Often, they fall into the fields of copyright infringement (such as illegal IPTV and Usenet indexers), or dark web sites that sell drugs, weapons, and other legal grey area products.
If you insist on making online purchases from such companies, you will often need to use cryptocurrency (typically Bitcoin) instead.
Credit Card Security
Aside from the restricted countries list, Visa and Mastercard both offer some additional security protections for when you’re shopping online .
Visa’s primary security feature for online shopping is Verified by Visa. Mastercard offers a near-identical system called Mastercard SecureCode.
The services are running in the background on every online purchase you make, but you’ll only have to interact with them when your purchase raises some red flags on the company’s in-house algorithms. Typically, that happens when you make an unusually large purchase, make a payment from a new device, or when you’re in a suspicious location.
The protection takes the form of a popup window on which you will be asked to confirm your identity with your bank or credit card provider. The precise way in which you can identify yourself is left up to the bank itself. Most commonly, it is a password.
Verified by Visa and Mastercard SecureCode are so similar because they use the same underlying technology called 3-D Secure. The “3-D” in the name is derived from the security authentication process.
It uses three domains (the acquirer domain, issuer domain, and interoperability domain) to transmit XML messages over SSL connections. The triple domain approach means the payer, payee, server, and client can all be confident in the identity of the other parties.
Other Credit Card Benefits
Visa and Mastercard each provide three levels of card (Traditional, Signature, and Infinite on Visa, and Standard, World, and World Elite on Mastercard).
Extra benefits on each card cover things such as travel insurance, concierge services, and car rental insurance.
However, from an online shopping standpoint, there’s one feature that’s particularly appealing—price protection. If you make a purchase and the price is lowered within 60 days, you can reclaim the difference from the company (up to a certain limit).
The feature is only available on Mastercard. If you have a World or Elite card, the protection period is extended to 120 days.
And the Winner Is…
For most people, there’s little difference between the two networks. Visa has a slight edge in terms of international acceptance, whereas the payment protection features of Mastercard will appeal to people who do a lot of online purchasing.
If you’d like to learn more about making purchases on the web, check out our online shopping guide and whether it’s safer to use credit or debit cards for online shopping .