Credit Cards

Is There a Difference Between Visa and MasterCard and Does it Matter?

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Joanne Poh

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What do the Bananas in Pyjamas, the Olsen twins and Visa and MasterCard have in common? Other than the fact that they’re all wealthy for seemingly doing nothing, one in each pair is virtually indistinguishable from the other.

On the surface, it looks like Visa and MasterCard do pretty much the same thing—they exist basically as intermediaries, handling your transaction from the time you pay to the time the bank gets involved. So is there really a difference between Visa and MasterCard, or are they basically clones of each other? Let’s find out.

 

Benefits

Have you ever wondered why so many credit cards seem to offer free travel insurance when you use them to book tickets? How considerate of them, right? Well, not really. Both Visa and MasterCard come with their own perks that often include free travel insurance, which credit card companies then advertise as being offered by them. What perks you get will depend on what type of Visa or MasterCard you have (eg. Visa Platinum will give you better benefits than plain old Visa).

In other words, just as you can’t really say that ALL credit cards from a particular bank are good or bad in terms of the perks they offer, not all Visa and MasterCard types are the same. Here are some examples:

  • All Visa cards – 10% off Hertz car rental
  • Visa Platinum – Free travel insurance when you purchase air tickets using the card; concierge service
  • Visa Infinite/Signature/Platinum/Gold – 25% to 50% when you sign up for Priority Pass airport lounge memberships
  • Gold MasterCard – Roadside assistance helps you out if your car breaks down or runs out of fuel in the middle of the highway.

Other than the above, there are perks like dining, travel and shopping offers which change periodically.

 

Security

Perks aside, one very important service provided by Visa and MasterCard is fraud protection. MasterCard has its SecureCode mechanism, which is basically an extra password that you can use before making payments online. To use this service you need to first sign up online and create your own SecureCode.

Visa has rolled out something very similar, called Verified by Visa. It works in pretty much the same way—enter a code to successfully complete a transaction online. You can either sign up for your own password online or let the bank send you an SMS with a temporary password, something you’ve probably already experienced when shopping online.

Does it matter? Well, most banks have already implemented their own form of verification for online transactions, usually by sending you an SMS and getting you to key in a code before the transaction will be allowed.

 

Transaction fee

Both Visa and MasterCard are sneaky little buggers when it comes to charging transaction fees. Whenever you use your credit card overseas or buy anything in foreign currency, you’ll not just be charged foreign exchange fees and cross-border transaction fees, but will also have to pay an extra little Visa or MasterCard fee that’s been quietly slipped in right there.

Visa charges a transaction fee of 1%, no questions asked, whenever you make an overseas purchase.

MasterCard on the other hand, charges from 0.2% to 1%.

  • If you buy something in foreign currency but are in Singapore, you get charged the minimum of 0.2%. This includes most online transactions.
  • If you’re overseas and buy something in Singapore dollars, you get charged 0.8%.
  • If you make a foreign currency transaction overseas, you get slapped with the full 1%. This covers most situations where you use your credit card on holiday.

Obviously, though, you can’t choose which credit card to use overseas based solely on Visa and MasterCard fees as each bank will have their own currency conversion and bank fees as well.

 

Is there really a difference between the two?

At the end of the day, the offerings of Visa and MasterCard are so intertwined with the entire package the bank is selling you that it’s hard to pick based on one or the other, which would be like buying a car based on the material used to make the steering wheel, or choosing a spouse based on his or her PSLE score.

What is more important, however, is making sure that your credit card benefits suit your lifestyle expenditure. Doing your homework first isn’t that tough, and you can easily use MoneySmart’s Credit Card Comparison Page to find out what you need to know.

Does the Visa or MasterCard designation make a difference to you? Let us know in the comments!

Image Credits:
frankieleon

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Joanne Poh

In my previous life, I was a property lawyer who spent most of my time struggling to get out of bed or stuck in peak hour traffic. These days, as a freelance commercial writer, I work in bed, on the beach, in parks and at cafes, all while being really frugal. I like helping other people save money so they can stop living lives they don't like.

  • Max Tiong

    Is it cheaper to use the 0.8% with SGD than 1.0% with the currency from the country? I always use CC when I travel instead of changing cash. Is that actually better or worse?