Of the four major credit card brands, the two most common and most widely accepted by retailers are Visa (NYSE:V) and MasterCard (NYSE:MA). While there can be major differences between cards bearing their respective logos, these companies only control a small amount of their benefits. Let's look at what Visa and MasterCard do and don't control, and whether one company offers better perks than the other.
What Visa and MasterCard actually do
Before we start comparing Visa and MasterCard, it's important to understand what these companies actually do.
Unlike Discover and American Express, Visa and MasterCard don't actually issue any credit cards. All Visa and MasterCard branded credit and debit cards are issued by individual banks. For example, Citi issues the ThankYou Preferred MasterCard, while JPMorgan Chase issues the Amazon.com Visa card.
Visa and MasterCard run a third-party payment processing network, serving as a "middleman" between consumers and merchants. The companies make money by charging fees to merchants in exchange for facilitating payment transactions.
Because the companies don't issue any credit cards, they have nothing to do with rewards programs, interest rates, fees, or customer service. In other words, it's unfair to base a Visa-MasterCard comparison on a Visa card issued by one bank and a MasterCard issued by another.
Is there a difference?
What Visa and MasterCard do have control over are features such as fraud and identity theft protection, rental car insurance, travel insurance, and purchase-protection programs. In these areas you could notice a difference between the two companies.
For example, Visa is known for having significantly better "loss of use" coverage on rental cars, which protects you from having to pay for collision and theft damage. Visa also offers "return protection" on more of its cards, which means that you could be reimbursed for purchases you'd like to return, even if the merchant won't take them back.
In terms of specific product lines, the Visa Signature premium brand offers a variety of cardholder benefits, including:
- Concierge service
- Lost luggage reimbursement
- Perks at over 900 luxury hotels such as room upgrades, free breakfast, and late checkout
- Special cardholder-exclusive "event" offers
- Discounts on shopping, museum visits, and transportation
- 24-hour roadside dispatch
By contrast, MasterCard has its own premium branding in its World and World Elite MasterCard-branded cards. The benefits of World-designated cards include:
- MasterCard's own luxury hotels and resorts program
- Concierge service
- Price protection
- Airport concierge
- Global service access
World Elite MasterCards offer another level of benefits. To name just a few:
- Elite status and upgrades with rental car companies such as Avis and National
- Personal travel advisor service
- Trip cancellation insurance
- Golf "concierge" and special golf offers
- Discounts on select airlines
So, the benefits directly provided by Visa and MasterCard do vary slightly, and depend on the particular type of card you have. However, different people value different benefits. For example, frequent travelers might insist on the best rental car insurance and baggage reimbursement programs, while those who shop frequently might place more value on price protection and extended warranties. For this reason, it's tough to say one is "better" than the other.
The most important thing
Now that you know which benefits are controlled by Visa and MasterCard, you can compare cards to determine which offer perks that matter most to your lifestyle.
Having said that, all Visa and MasterCard credit cards offer a certain level of benefits, such as rental car coverage and fraud protection, so these are generally a secondary motivator to apply for certain cards. When shopping for a new credit card, most consumers place more emphasis on bank-specific perks such as reward programs and interest rate offers. Furthermore, some popular credit card products are issued in both Visa and MasterCard varieties, allowing customers to choose their favorite.
There is no clear winner between Visa and MasterCard, but that doesn't mean one company's benefits might not be the best choice for you.
Matthew Frankel owns shares of American Express. The Motley Fool recommends Amazon.com, American Express, MasterCard, and Visa. The Motley Fool owns shares of Amazon.com, Citigroup Inc, JPMorgan Chase, MasterCard, and Visa. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.