Visa, Mastercard, American Express - Does it Make a Difference?

When it comes to picking the logo that is to grace the front of your latest credit card, you may find it easy to make a rash decision on the basis of something trivial, like an ad you recently viewed. But while the three major credit card companies – Visa, MasterCard and American Express – have a lot in common between them, there are also several distinct differences which have an impact on where and how you may use your credit card.

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Merchant Acceptance

Among the most important differences between these three credit cards is the number of merchants who accept transactions from them. Globally American Express lags far behind the competition in terms of the number of merchants who accept their cards. With only 25 million merchant locations accepting Amex cards, a typical merchant is about 40% more likely to accept your Visa or MasterCard, instead of an American Express card.

In the U.S., American Express is also behind its two major competitors, as there are only 6 million merchants who accept its cards, in comparison to about 9 million each for both Visa and MasterCard. However, unlike the situation in other parts of the world, most merchants in the U.S. accept all three cards.

Merchant Cost

For retailers and merchants, the key difference between the three card networks is the cost of supporting each of them. Every time a customer uses their credit card to make a purchase at a location, the merchant is levied a small fee by the respective card network for the processing of the transaction. The processing fee varies from one network to the next and is often the primary factor a merchant considers when deciding which cards to accept.

Visa generally charges between 1.43% and 2.4% of the value of the transaction, MasterCard charges 1.55% to 2.6%, with Amex levying between 2.5% and 3.5%.

Issuing Banks

Yet another difference you will find when comparing credit cards from the different networks is in the actual cards on offer, which are dependent on banking partners. Generally, Visa and MasterCard do not issue their own credit cards. What this means is that that the cards bearing the logos of either of these networks are issued by either partner banks or credit unions, as well as by merchants with branded cards. Visa provides a massive range of card options issued by a collection of banks and financial institutions, including Capital One, Bank of America, Wells Fargo and Chase. MasterCard also boasts an impressive portfolio of major issuers that include Barclays, HSBC, and Capital One, among others.

On the other hand, American Express operates as both a card issuer and network. As a result, the network does not partner with external banks to issue its branded credit cards.

Types of Cards

As the two largest networks to handle consumer credit card transactions, Visa and MasterCard offer the biggest variety of card types and corresponding benefits. The specific perks vary, with Visa’s entry-level Basic having the fewest, Visa Signature being the mid-range and elite Visa Infinite holders enjoying the most benefits of all. This kind of hierarchy is also seen with the second most popular card company, MasterCard, whose levels from entry level to elite are MasterCard Basic, World MasterCard and Elite MasterCard, respectively.

As you may have noticed throughout this review, the American Express model is drastically different from those employed by Visa and MasterCard in most areas, and the type of cards and benefits are no different. Unlike the former two networks, American Express cards only provide a single level of benefits, which are offered to all cardholders.

Fringe Benefits

The last of the major differences between the credit card companies are the various packages of value-added benefits they provide to their cardholders. Although some of these are common to all three networks (rental car insurance, for instance), there are others which are exclusive to certain networks. For example, holders of a World Elite Mastercard® enjoy a 24/7 concierge service in addition to special travel offers and savings. If you are looking to enjoy specific benefits, you may have to pick a card from the network that offers them.

Does the Network You Choose Matter?

As can be seen, in spite of their many similarities, the three main credit card networks have their own unique features as well as limitations. Each of these factors may prove pivotal when you have to choose a new credit card. When you need to compare benefits to decide which credit card to choose, the rewards and perks offered by the card issuers are more important and offer more value than those provided by the payment processor. These may include cash-back awards, extended warranties and price matching, signup bonuses, airport lounge access and more.