Four major companies dominate the electronic payments industry- Visa Inc (NYSE:V), Mastercard Inc (NYSE:MA), American Express Company (NYSE:AXP), and Discover Financial Services (NYSE:DFS). Jointly, the companies handle the largest number of card transactions in the world.
As opposed to other companies that extend credit to then client, Visa and MasterCard are unique cases as they do not involve in offering credit or issuing the cards. Both Visa and MasterCard have partnered with other companies that issue the cards.
Various factors determine one’s choice for a credit card. These include low interest, cash-back potential, and the rewards offered. Although many people may not consider the card’s network so much, your card’s brand has implications on where it can be used and its purpose.
Credit card processors oversee the entire purchase process, including protecting shoppers, approving or declining transactions, and ensuring that the money flows to and from the right accounts.
Visa vs. MasterCard
Majority of Americans today have at least one debit and credit card. Many people may have several cards from various issuers to take advantage of the issuers’ various offers and rewards.
Both Visa and MasterCard are involved in all three areas of the payments market. These companies operate as network processors and have a unique edge, although they operate differently.
The two companies are publicly traded with Visa having a $365 billion market capitalization while MasterCard commands a $293 billion market capitalization. Both companies have a big portfolio of co-branded offerings through which they extend credit or issues cards.
Visa and MasterCard have similar business models. The companies do not issue cards directly to the public. Instead, they have partnered with other companies and financial institutions like banks and credit unions. It is the financial institution that, in turn, offers card payment cards to businesses and individuals.
Payment Terms and Conditions
It is the issuing institution that comes up with the terms and conditions of use. Among issues addressed in terms and conditions include rewards, fees, and features on the card. The issuing bank underwrites credit cards. In addition, the issuing bank also responsible for structuring the interest rate and developing reward programs.