Visa vs. Mastercard: What's the Difference? Which is better? Which is easier or harder to get?

hey I'm Jessica from prom on a comet in this video we are going to talk about the differences and the same misses of visa versus MasterCard we're gonna talk about the question of is one better than the other and is one more difficult to get than the other when you are going after credit cards but before we talk about any of that I'm gonna ask you to please subscribe to this YouTube channel if you have not already and if you have already I thank you for doing so so I got a comment this weekend from someone asking why visa was more difficult to get then MasterCard saying they had multiple credit cards and maybe twice as many of them were MasterCard versus Visa and in my head I thought well I don't really think getting a visa is any more difficult than getting a MasterCard so I thought I would do a video about what the differences are and you know what is the situation in terms of the perception maybe that one of them is easier to get than the other and also the question is one better than the other so before we talk about what the differences are and how visa and mastercard are the same we should talk about what they are because I think there is a perception that Visa and MasterCard are credit cards and in reality they are not credit cards themselves they are the credit card processing network that many credit cards use in order to process that transaction between you and the merchants and the bank that issued the credit card so let's use a Visa card for example let's say you have the chase freedom visa you go into a merchant maybe you go in a store or maybe you use it at the gas station when you swipe it at the pump or you give it to the person behind the counter and they swipe it that is a transaction where the merchant is essentially calling the visa network and the visa network is then behind the scenes checking on you to see if that card is valid and if you have the room in your credit line to use that card and all of those sort of things before spitting back an answer to the merchant to say yes this card can be used and then when that happens the visa network also would tell your issuing bank in this case Chace that a purchase has been made and then chase is on the hook to pay the merchant for whatever it is that you bought so then when chase goes and they go to pay the merchant off that also would go through visa and visa takes a little chunk of that transaction and then gives the rest to the merchant so the way visa makes its money and mastercard as well is if your card is a visa then visa is taking a little chunk of every single transaction that is made with that card if it's a MasterCard card same thing they're gonna take a little chunk of every single transaction but visa does not issue the credit card MasterCard does not issue the credit card the chase freedom visa is issued by Chase a capital one saver MasterCard is issued by Capital One so the bank that actually holds your account is going to be a separate Bank Visa and MasterCard are essentially middlemen that stand between the bank and the merchant and then when you use the card they do the processing to make those two things linked up and they take their little piece of that transaction for making it all happen now since Visa and MasterCard do essentially the same thing they really are just competitors who are trying to get the banks to work with them and use their network to process all these transactions over since they are going to get a piece of every single transaction and they don't want them to choose the competitor and now in order to do that they have to figure out some way to differentiate themselves and it's not very easy for Visa or MasterCard to differentiate themselves from the other which is probably why you would have the question in the first place what's the difference because you go into most places and you can use your Visa or MasterCard and it really doesn't matter right so for a lot of people you think I don't care if I have a Visa or I have a MasterCard they're essentially the same thing they're taken everywhere but Visa and MasterCard want you to think of them as different and so they are always trying to figure out ways to differentiate themselves from each other as far as the banks are concerned that differentiation between Visa MasterCard is mostly about money which one of them is going to give the bank a greater amount or take a lesser amount of those transactions or give them some other perks within the processing so it's really just a money game if one is cheaper than the other they're going to choose that one for the most part so on that end MasterCard or Visa are trying to differentiate themselves to the banks mostly on price now they may do other things talking about security of their network versus the other network or whatever but in many many cases the banks themselves are going to be choosing on price and this is why sometimes you will see a card change from visa to MasterCard or MasterCard to Visa they have a new agreement and it's just like you know buying many other things that businesses do in the world when it comes up that their contract is over or whatever they bid it out again and then they decide if they want to continue with who they were already using or if they want to change so on the banks side they're not really carrying all that much about whether they are Visa or MasterCard customers whoever gives them the better deal is who they're gonna choose and that's who's going to be on their credit cards now I talked about Visa and MasterCard being fairly interchangeable on the consumer end and even sort of interchangeable on the bank end there are of course exceptions and one that might spring to your mind is Costco Costco in their retail locations only accept Visa they don't accept a MasterCard so for you as a consumer that means if you are a Costco customer you're going to have to have a MasterCard if you want to use a credit card in side their stores now why did Costco do that because Visa gave them a sweet deal they have you know very extremely low transaction fees that they have to deal with now and by doing that they obviously help their own bottom line and they keep their prices lower and because Costco has so much power you as a consumer you as a Costco member are willing to deal with the fact that you can only use your Visa card there a lot of other stores could not get away with that if they said you know we only take Visa people would say well I'll just go to some other store Costco has the power to get people to use only Visa so they got what they wanted out of visa and visa gets what they want a little bit too because even though they charge Costco so little they are getting a ton of transactions and they're keeping anybody else from getting that business and if you want to use a credit card at Costco you're going to get a Visa card you're getting you can get a Visa card from anywhere but those are all visa and you're not only going to use them at Costco you're gonna use that Visa Card other places as well so as far as visa is concerned they have even though they gave Costco a sweet deal they have gotten a lot in return that Costco example is the exception that proves the rule though in most places you're going to be able to use MasterCard or Visa so they have to come up with other ways to try to get you to care whether your card is a MasterCard or Visa because in most cases when you get a credit card whether you get a chase card or you get a Citibank card or whatever whether it's a MasterCard or Visa most of the things you're getting from that card the rewards whether it's cash back or its points or whatever those are coming from the bank they're coming from Chase they're coming from Citibank whoever so they're not coming from MasterCard or Visa in most cases however there are some cases where MasterCard and Visa are giving a little bit more on those cards if you're aware of those extras that they are offering which most people aren't so if the rewards are coming from the banks that issue the cards really where MasterCard or Visa might add some extra value extra benefits are in things like warranty protection maybe travel insurance maybe discounts at certain retailers when you use a MasterCard versus a Visa in addition if you have a higher-end card you may know that there are some higher-end benefits that come from MasterCard or Visa if you have a card such as a World MasterCard or a world elite MasterCard or a Visa signature or a Visa Infinite from the outside if you're not really well-versed in these things you might think that those are all just sort of marketing fluff in there Xtreme adding a lot of extra names onto these credit cards but really there are some differences in benefits that you get from a Visa signature to a Visa Infinite or from a world MasterCard to a world elite MasterCard or if you you know compared the world elite to the Visa signature all of those sorts of things there are some differences there most people don't know what those differences are though and so that is where the challenges for Visa or MasterCard however credit cards are a huge business so even if a very small slice of people knows what the difference is between some of these brands the Visa Infinite versus the world elite MasterCard that can mean millions of dollars so if you are someone that goes after a world elite MasterCard over some sort of Visa card because you know it has a discount on post mates service well then maybe that is something that is going to be just enough to you know tip the scales where they make more money than Visa does so this is why this continues to go on even though from the outside most of us don't see much of a difference now I feel like maybe I've already answered one of the questions from the top of this video which is is visa better than MasterCard or is MasterCard better than Visa no they're really not a whole lot different now some people might think Visa is better because of the fact that they can't shop at Costco with a MasterCard some people might think MasterCard is better because there are certain perks that they can't get from a Visa card but the vast majority of people don't really have a preference and because so what many merchants are gonna take both it doesn't really matter then I to the question of why it would be more difficult to get a visa card than a MasterCard or a MasterCard versus a Visa card if they are not actually the ones issuing the cards if they are not actual credit card issuers why would it be more difficult and I think the answer here is that it's not more difficult it is simply a case of there being a perception due to the fact of which companies which banks are actually issuing Visa cards versus mastercards for example Capital One issues almost exclusively mastercards now they do have some visa cards but almost all of their cards are master cards and overall Capital One is thought to be an issuer that is easier to get credit cards from so if you were to get a credit card from Capital One and it was a MasterCard you might think MasterCard was easier to get but it's not because it's a MasterCard it's because it's from Capital One and Capital One is the bank that makes the decision on your application and so they are the ones that are deciding that it is easier to get their cards not a similar vein look at Chase Chase is almost exclusively partnered with visa and Chase overall is seen as a bank that has a little bit higher standard when it comes to who they are willing to lend to so they are partnered with visa and if you are someone that wants to chase card and it feels like it's more difficult to get a chase card it's possible that you might think that it is more difficult to get a visa card but in reality it is chase that is making those decisions and visa is just the credit card processing network that they choose to use they could eat just as easily change over to MasterCard and then maybe you would think MasterCard was more difficult but because it is that certain banks are allied with Visa or MasterCard you might get the perception that Visa was easier or more difficult than MasterCard or vice versa when in reality it doesn't matter it is the individual bank capital one has its lending standards Chase has its lending standards Citibank has its lending standards and it doesn't really matter whether those cards are Visa or MasterCard finally we've been talking about MasterCard versus Visa but it would be ridiculous if I did not at least mention American Express and Discover so American Express and Discover each run their own processing network so they not only issue their credit cards they also process their credit cards so they're making money in two ways now even though they're making money in two ways this has led to a longer period of them not being accepted in as many places as a MasterCard or Visa so mostly in the u.s. anywhere MasterCard or Visa is you probably going to be able to use your American Express card and your Discover card once you go outside of the US it is a little less so so both of them have been trying to build out their networks but obviously MasterCard or Visa and to some extent a head start and because they are a company that works with so many banks they had the motivation to really build out that network so MasterCard and Visa used to be more ahead American Express and Discover our closer now while American Express and Discover mostly just process their own credit cards they also can and do process for other banks as well an easy example the Wells Fargo propel American Express card which I've talked about a lot on this channel so that is a card issued by Wells Fargo Wells Fargo makes the application decisions they decide what the rewards are going to be all of the stuff that a card issuing bank would do but they use American Express's processing Network they're not doing anything else with American Express American Express is just basically acting in that same way that I've just explained that MasterCard or Visa do for that card so American Express and Discover both had the capabilities to do what MasterCard and Visa do for other banks but they are way behind in terms of that being a part of their business and the fact that their name is on the issuing site already just sort of increases the confusion and then people aren't really quite sure what they're getting when they get a card like the Wells Fargo American Express card is at Wells Fargo is that Americans press what's going on and sometimes that confusion is going to make it more difficult for American Express and Discover to compete so that's it questions comments put them in the comments section below otherwise I thank you for watching in as always please go to proud money comm where we do credit card reviews you talk personal finance we talk deals and all sorts of other fun stuff too thank you for watching back

Channel: ProudMoney - Credit Cards & Personal Finance

Views: 37,450

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Id: 1c0M165auag

Length: 14min 46sec (886 seconds)

Published: Mon May 18 2020