Visa vs. Mastercard: What are the differences (and do they really matter)?

Mastercard vs. Visa: Overview

1. Visa and Mastercard don’t issue their own credit cards

It might seem counterintuitive, but neither Visa nor Mastercard directly distribute credit cards. Both of these companies are processing networks that partner with card issuers like banks, credit unions, or other financial institutions to get their cards to the public. And it’s the actual card issuer, not the processing network, that sets most of the terms like interest rates, rewards and annual fees.

2. Visa and Mastercard are processing networks

As processing networks, both Visa and Mastercard handle a lot of the behind-the-scenes work that allows your payments to be processed. In other words, these companies provide the technologies and networks that power your transactions. When you make a payment against your credit card balance, you are not paying either Visa or Mastercard directly—you’re paying the card issuer.

3. Both are widely accepted

Visa and Mastercard are both widely accepted at Canadian retailers, with a few exceptions.

4. Whether a credit card is a Visa or Mastercard really shouldn’t impact your choice

In the vast majority of cases, the processor—Visa or Mastercard—is immaterial to your choice of a credit card. Your best practice is to compare each credit card option on its own merit, paying attention to details like interest rate, rewards or cash back, welcome bonus and additional perks. From there, you should choose the credit card that best aligns with your particular spending habits, and offers benefits you will use. This selection process can be extended to financial institutions as well. The best choice for you may well come from a bank, credit union, or possibly even a retailer, and you should be open to all of these card options even if you don’t hold any other accounts with that lender.

Compare the best credit cards in Canada for 2020*

Mastercard vs. Visa: What are the differences?

The differences between Visa and Mastercard are negligible and likely won’t make or break your decision about which card to use. However, there are a few slight distinctions readers should know about.

1. Acceptance

The vast majority of Canadian retailers accept both Visa and Mastercard. That said, Costco and No-Frills are two notable exceptions, accepting Mastercard only for their credit card payments. If you shop regularly at either of these retailers, you might want to consider carrying a Mastercard.

2. Benefits

While most benefits and perks are set by the card issuer, there are some cases where the processor has an influence. For example, when it comes to airport lounge access, Visa works with the Priority Pass program while Mastercard offers membership in their proprietary Mastercard Airport Experiences. Other areas to investigate include concierge services, and the terms and conditions related to liability insurance and fraud protection a card provides.

3. Card tiers

You may have seen some Visa cards include “Infinite” or “Infinite Privilege” in their names, and some Mastercards include “World” or “World Elite.” These tiers are meant to communicate that they are premium cards, offering added perks and benefits. They also carry higher income requirements and annual fees.

Visa Infinite cards offer discounts at eligible partner hotels, access to Visa concierge service, up to 12 types of insurance and, sometimes, membership and access to Priority Pass airport lounges. Infinite cards usually command around $120 in annual fees and have a minimum individual income requirement of $60,000. Infinite Privilege cards are the most premium in the Visa line, with all of the benefits of the Infinite series plus additional perks for airports, hotels, wine and fine dining. These benefits are reflected in the annual fee—a hefty $399—and in the minimum income requirement of $200,000.

Mastercard’s tiers are called World and World Elite. Mastercard World cards typically carry a modest annual fee of around $99 and have a minimum annual individual income requirement of $60,000. World cards offer extra travel insurance, plus entertainment perks through Priceless Cities. In the top tier, Mastercard World Elite cards add to these perks additional insurance coverage, membership to Mastercard Airport Experience Lounges, and Boingo Wi-Fi memberships. These tend to charge $120 to $150 in annual fees, and applicants must be able to show $80,000 in annual income.

The final word

When deciding whether to go with a Visa or Mastercard, the bottom line is the things that matter—sign-up bonuses, rates, benefits and terms—are usually set by the issuing institution, not the processor. Your best bet is to decide which programs or perks will be most valuable and applicable to your spending profile, and seek out the specific card that fits the bill.

Here are a couple of strong options to kick off your search:

Tangerine Money-Back Credit Card*

• Annual fee: $0
• Earn rate: 2% cash back on up to 3 bonus categories of your choice; 0.5% on all other purchases
• Income requirement: $12,000
• Additional benefits: Purchase assurance and extended warranty

Get more details about the Tangerine Money-Back Card*

TD Cash Back Visa Infinite Card*

• Annual fee: $120 (free for first year)
• Earn rate: 3% cash back on gas, grocery and recurring bill payments; 1% on all other purchases
• Income requirement: $60,000 (personal) or $100,000 (household)
• Additional benefits: TD Auto Club roadside assistance membership; travel medical insurance

Get more details about the TD Cash Back Visa Infinite*