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Choosing between Visa & MasterCard

20 February 2009 by CreditCardsCo™

History behind Visa

After companies like Western Union, General Petroleum, and AT & T introduced their own versions of a credit card a couple of decades earlier, Bank of America starting issuing the BankAmericard to California state residents. Compared to previous credit cards, the BankAmericard possessed a pioneer feature allowing card members flexible payment options. As the crave for credit cards increased throughout the United States, Bank of America began licensing other banks to issue the BankAmericard in 1965. By 1972, the BankAmericard was issued and used by resident in 15 countries. As Bank of America gave up licensing and control of the BankAmericard program, licensed banks created a multinational member corporation named IBANCO. A similar corporation named National BankAmericard Inc. (NBI) was formed by issuing banks within the United States. In 1975, IBANCO and NBI became Visa International and Visa U.S.A. respectively.

History behind MasterCard

The journey to the MasterCard Credit Cards of today began in 1966 when the United California Bank and a number of other banks wanted a competitor to BankAmericard (now Visa) issued by Bank of America. These banks formed the Interbank Card Association and later joined forces with the First National Bank of Louisville, Kentucky to create 'MasterCharge : The InterBank Card' in 1967. Two years later, National City Bank came on after integrating its Everything Card into the MasterCharge program. In 1979, 'MasterCharge : The Interbank Card' was renamed to "MasterCard". Before its shares were diluted through an initial public offering in 2006, the MasterCard brand was owed by a membership association consisting of all the banks issuing cards on Master Card.

Market Share

According to a 2006 survey by The Nielson Report, Visa holds 44% of the credit card market share and 48% of the debit card market share within the United States. Based on these figures, Visa is believed to be the biggest electronic payment processing company in terms of market share.

International Operations

Even as MasterCard and Visa have a large stake in the U.S. market, they remain to have a strong hold in the international market partly due to the history behind both companies and the fact that no major opposition company has risen in Europe and Asia in recent times. Another fact to take into consideration is the worldwide ownership of both companies largely made up of banks. With these owning banks, it usually seems a reasonable option to issue both cards or the one they have part-ownership in. Yet another factor that has prevented the arising of strong competitors in international operations has been the customer preference for Visa and MasterCard. Both cards have seemingly integrated into the hearts of customers and merchants tend to accept cards customers are likely to use as a means of payment.

Market Capitalization

In early 2008, Visa Inc. conducted the largest Initial Public Offer (IPO) in U.S. history through which they planned to raise US$17.9 billion. On ending the IPO generated US$19.1billion from sales of 446.6 million shares at US$44 per share. MasterCard carried out a similar exercise in 2006, raising US$2.398 billion from sales of 61.5 million shares at $39 per share. Most recent figures from 2008 reveal Visa had a market capitalization of US$75.20 billion while that of MasterCard stood at US$27.36 billion. In terms of revenue, MasterCard boosts a higher figure of US$4.067 billion from 2007 compared to Visa Inc's US$3.6 billion from the same year.


Globally, Visa and MasterCard are the two largest processors of electronic payment and to a large extent are the fiercest competitors to each other. Within the United States, American Express and Discover Financial Services offer services similar to Visa and MasterCard but AMEX and Discover are involved in businesses asides electronic payment processing. Both competitors issue credit and debit cards for themselves unlike Visa and MasterCard who have to rely on a network of issuing banks and financial institutions for business. Within Asia, China Union Pay holds a substantial market share of electronic payments.

Final Decision

Whenever choosing a credit, debit or prepaid card, its card network being a Visa or MasterCard doesn't really matter as most merchants will not accept one and not the other. Cards should be chosen based on cost of ownership (interest rates, monthly rates), personal preferences, and card rewards; although both networks offer similar reward programs run by the issuing banks or third party agents.

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