Visa vs. Mastercard: Which one is better in Canada?

visa-vs-mastercard-canada

    Visa and Mastercard are widely regarded as the leading card choices in Canada. With a wide range of benefits, customized rewards programs, and card-specific fees, choosing the perfect card that matches your individual requirements can be a challenging endeavour. However, it’s essential to know that Visa and Mastercard collaborate with financial institutions to provide cards. This means that many of the benefits between the two types of cards are decided by your bank. Overall the differences between Visa and Mastercard are minor, with merchant acceptance as the primary factor.

    In this comprehensive article, we aim to demystify the comparison between Visa and Mastercard, enabling you to make a well-informed decision regarding the perfect fit for you. Additionally, we will explore alternative options beyond these industry giants, such as American Express. This alternative offers distinctive features that may better suit your unique financial circumstances or lifestyle.

    What are Visa and Mastercard?

    Visa and Mastercard are two of the most popular payment networks that have transformed how we transact, ensuring faster, more secure, and convenient payment experiences. They are not card issuers themselves but collaborate with banks and financial institutions to provide cards to customers. Financial institutions are the ones who set conditions such as annual fees, interest rates, exchange rates, and late fees. Customers can use these cards for purchases in-store and online.

    History of Visa

    Visa, a global payments network, empowers customers worldwide to securely make transactions using their Visa-branded cards. Bank of America launched the BankAmericard, which served as the precursor to Visa, tracing its history back to 1958. Initially introduced as a pilot program in California, BankAmericard aimed to provide customers with a convenient payment method and stimulate consumer spending. 

    The program expanded to other cities across the United States in 1959, and, by 1966, gained acceptance in banks outside the USA. Through licensing agreements with other banks, BankAmericard further expanded its reach, allowing regional issuance of BankAmericard credit cards. In 1976, BankAmericard underwent a rebranding process and emerged as Visa, solidifying its position as a global brand.

    Today, Visa’s presence spans across more than 200 countries, with over 3 billion Visa-branded cards in circulation. With acceptance at over 44 million locations, including online stores and ATMs, Visa provides customers with widespread accessibility. Alongside its extensive reach, Visa offers a range of rewards, benefits, and top-notch security measures, ensuring a secure and rewarding payment experience for cardholders.

    [Offer productType=”CreditCard” api_id=”5f32ba8692ec22115033b2dc” id=”145742″]

    History of Mastercard

    Mastercard is one of the largest and most widely accepted payment networks in Canada. The company’s history dates back to 1966 beginning with Interbank Card Association (ICA), a group of banks seeking to create a competitor to the BankAmericard (Now Visa). The association launched its own credit card called Master Charge in 1969. In 1979, the name was changed to Mastercard to reflect the global reach of the brand. Mastercard has continuously evolved, introducing innovative payment technologies and expanding its presence internationally. 

    With a strong emphasis on security, convenience, and global acceptance, it has become a leading player in the payments industry. They offer payment access to over 37 million locations across the globe. Mastercard provides various benefits, including fraud protection, travel insurance, rental car collision coverage, and free access to exclusive airport lounges for cardholders. Note that many benefits are exclusive to their travel credit cards.

    Similarities and Differences between VISA and Mastercard

    Key InformationVisaMastercard
    Convenience and Global AcceptanceWidely accepted worldwide (44 million merchants)Widely accepted worldwide (37 million merchants)
    Fees and Interest RatesVaries depending on the issuerSame as Visa
    Rewards and BenefitsPerks, rewards, purchase protection, zero liabilitySame as Visa
    Travel Insurance CoverageOffered on premium cardsSame as Visa
    Security FeaturesZero liability policy, ID Theft Protection (Verified by Visa)Zero liability policy, ID Theft Protection (MasterCard SecureCode)
    Contactless PaymentsEnabled for tap payments, compatible with mobile walletsSame as Visa
    Debit CardsAvailableAvailable; Restricted online acceptance (Canada)

    Convenience and Global Acceptance

    Visa and Mastercard cards are widely accepted worldwide, making them an excellent choice for travellers. Their extensive acceptance networks ensure that you can use your card in various locations, facilitating seamless transactions wherever you go. You can use both Visa and Mastercard cards to make purchases at retailers, restaurants, online stores, and more throughout the country. Visa has a slightly higher acceptance rate globally at 44 million locations vs Mastercards’s 37 million locations. 

    There are also some retailers that will exclusively use one payment network. Canadian examples include Costco and No Frills, which only accept Mastercards at their stores. In the USA Costco stores only accept Visa cards. Aside from these cases, the two cards generally offer identical convenience and global acceptance. 

    Fees and Interest Rates

    The fees and interest rates for Visa and Mastercard vary depending on the specific card and the institution that issues it. Generally, the fees are more influenced by the issuer, who may impose different charges like annual fees, late payment fees, and balance transfer fees. 

    In terms of foreign exchange rates, Mastercard typically provides a more competitive rate compared to Visa, although both are just under 1%, with the issuer charging an additional 2.5%. This means your financial institution charges an additional 2.5% fee ontop of the Visa or Mastercard rate. However, some cards such as the Scotiabank Passport Visa Infinite card don’t have this additional 2.5% fee. 

    It’s important to compare different offers from different issuers before deciding which one is best suited for you. Additionally, be sure to read the fine print carefully so that you fully understand any additional charges or restrictions that may come with your card.

    Rewards and Benefits

    Certain cards may also offer rewards programs which can help to offset the fees associated with the card. Both Visa and Mastercard offer cardholders a range of perks and rewards. Basic cards provide benefits like purchase protection and zero liability, while premium cards unlock additional advantages such as cashback, points, and travel privileges. 

    Regardless of whether you opt for Visa or Mastercard, both offer a diverse selection of credit cards tailored to suit your preferences. At each card tier level, there is significant overlap in rewards offered. Explore the options available at different financial institutions as well as the rewards offered by each usually vary. 

    Travel Insurance Coverage

    Both Visa and Mastercard offer travel insurance coverage on premium cards, protecting against situations like trip cancellation, rental, lost baggage, and emergency medical expenses. However, the specific coverage and limits may vary depending on the card and issuer. It is essential to carefully review the terms and conditions to ensure you understand the extent of the coverage provided before relying on your credit card for travel insurance.

    Security Features 

    Visa and Mastercard have similar security features. They both have zero liability policies, ensuring that you bear no responsibility for any unauthorized charges made on your card. Additionally, Mastercard provides an extra layer of security through its “ID Theft Protection” feature. This feature actively monitors your personal information and promptly alerts you if any suspicious activity is detected, further safeguarding your identity.

    When completing online purchases verified by Visa and MasterCard SecureCode are security solutions for online purchases in Canada. These services provide an additional layer of authentication that requires customers to enter a unique password or code (Usually SMS) when making transactions on participating websites. This helps protect consumers from unauthorized use of their cards and reduces the risk of fraud. There is little to no difference between the user experience and security for transactions when using either program. 

    Contactless Payments

    Both Visa and Mastercard enable contactless payment options, allowing you to simply tap your card for purchases below a specific amount. This feature provides a convenient and swift payment method, particularly in situations where avoiding contact with payment terminals is desired. Furthermore, both cards are capable with mobile wallets such as Apple and Samsung Pay. 

    Debit Cards

    Mastercard and Visa both offer debit cards. Both cards require you to have funds pre-loaded into a chequing account. Unlike a credit card, you can only spend the available funds in your account. As a result, they are not classified as a line of credit and will not affect your credit score. 

    Both the Mastercard and Visa debit cards have similar features. They offer contactless payment options, integration with online banking, and fraud protection measures. However, the primary difference is that Mastercard debit cards are accepted by fewer merchants. In-person acceptance of both cards is widespread. However, when shopping online in Canada, Mastercard debit cards have restrictions that limit their use to a list of select merchants.

    Finally, there is no clear winner when it comes to fees. This is because the issuing financial institution establishes fees, resulting in variations in rates and fees by card.

    Overall, both Mastercard and Visa Debit cards offer similar features. However, the Visa debit card is generally regarded as better because of more accepting online merchants in Canada. 

    Card Tiers of Visa and Mastercard

    When it comes to comparing credit cards, Visa and Mastercard are two of the most popular options available. Both companies offer a range of card tiers, making it difficult to choose the right one for your needs. Here, we’ll take a closer look at the different Visa and Mastercard credit card tiers.

    Visa Credit Card Tiers

    Visa offers five different tiers of credit cards: traditional, gold, platinum, infinite, and infinite privilege. Each tier provides a different set of benefits and rewards and has a different cost and set of requirements. It’s worth taking the time to review the options to find the best Visa credit card for yourself.

    Card TierAbout Tier
    Visa ClassicAnnual fee: Usually $0

    Income needed to apply: Minimum income $12,000

    This card is a good choice for those who are just starting to build their credit history
    Visa GoldAnnual fee: Usually $110/year

    Income needed to apply: Minimum income $35,000

    Features and perks: Travel insurance and emergency cash replacement
    Visa PlatinumAnnual fee: Usually $120/year.

    Income needed to apply: $35,000 (individual), $60,000 (household)

    Features and perks: Same as VISA Gold, airport lounge access, concierge services, and other VIP travel benefits

    Platinum cards’ main differentiation is allowing for higher credit limits than gold cards
    Visa InfiniteAnnual fee: Usually $120/year

    Income needed to apply: $60,000 (individual), $100,000 (household)

    Features and perks: Same as VISA Platinum, exclusive dining offers and hotel privileges.
    Visa Infinite PrivilegeAnnual fee: Usually $399/year

    Income needed to apply: $150,000 (individual), $200,000 (household)

    Features and perks: Same as VISA Infinite, plus higher points earning potential. Some cards may also include an airline companion pass. 

    This is the highest tier of Visa credit cards, offering the most exclusive benefits and rewards. This card is typically reserved for high-net-worth individuals and has a high annual fee.

    Mastercard Credit Card Tiers

    Mastercard offers three different tiers of credit cards: standard, world, and world elite. Each tier provides a different set of benefits and rewards, so it’s important to consider a top Mastercard credit card that best fits your needs.

    Card TierAbout Tier
    Standard MastercardAnnual fee: Usually $0

    Income needed to apply: No MinimumThis card is a good choice for those who are just starting to build their credit history
    World Mastercard Annual fee: Usually $99/year

    Income needed to apply: $60,000 (individual), $100,000 (household)

    Features and perks: Travel insurance, price protection, extended warranties, coverage for lost/stolen items, and concierge service
    World Elite MastercardAnnual fee: Usually $150/year

    Income needed to apply: $70,000 (individual), $120,000 (household)

    Features and perks: Same as World Mastercard, exclusive dining, hotel and lounge offerings

    Financial Issuers of Visa and Mastercard in Canada

    Financial InstitutionVISAMastercard
    BMO BankYesYes
    Canadian Tire BankNoYes
    Capital OneNoYes
    CIBCYesYes
    DesjardinsYesYes
    EQ BankNoYes
    HSBCNoYes
    ICICI BankYesNo
    KOHONoYes
    Laurentian BankYesNo
    Manulife YesNo
    MNBA BankNoYes
    Meridian Credit UnionYesNo
    National Bank NoYes
    NEO FinancialNoYes
    Presidents Choice BankNoYes
    RBC BankYesYes
    Rogers BankNoYes
    ScotiabankYesYes
    Simplii FinancialYesNo
    TangerineNoYes
    TD Canada TrustYesNo
    Walmart RewardsNo Yes
    This only applies to credit cards and applicable prepaid credit cards. 

    Alternative to Visa and Mastercard

    American Express

    American Express cards are generally known to earn you the most travel rewards points in Canada. This is because they generally have large welcome bonuses which you can redeem on merchandise, travel, or statement credits. In addition, American Express benefits include exclusive access to events and experiences, such as concerts, sporting events, or dining experiences. 

    While American Express offers attractive perks, it’s important to note that its acceptance is less widespread than Visa or Mastercard. You may encounter limited acceptance of American Express outside major cities and tourist destinations. This is because the company charges higher fees to merchants, making it less attractive for some businesses to accept.

    [Offer productType=”CreditCard” api_id=”5f46bf1f3a11ef174fd0ee66″ id=”196280″]

    Visa Vs Mastercard Canada: Bottom Line

    When it comes to deciding between Visa and Mastercard, it’s essential to understand that both cards are similar. The primary difference lies in the financial institution that issues the card. As a result, you should analyze cards on a case-by-case basis from different banks. 

    It’s generally best to check the card offerings from your current financial institution first, and if they don’t meet your needs, explore alternative options. Keep in mind that certain situations may require a specific card, such as shopping at Costco in Canada (Mastercard). Alongside Visa and Mastercard, it’s also worth exploring other card options available in Canada, including American Express.

    FAQs About Visa vs Mastercard Canada

    What is the difference between Visa and Mastercard?

    There are minor differences between Visa and Mastercard in Canada. The main differences between Visa vs Mastercard are in acceptance, fees, card tiers, issuing, institutions, and rewards and benefits. Both have similar features such as fraud protection, contactless payments, and global acceptance. Additionally, their premium cards can have travel insurance and airport lounge access. The only significant difference is merchant acceptance. While both cards are accepted almost anywhere in Canada, certain establishments may exclusively accept one. For example, Costco in Canada only accepts Mastercard.

    Which card is better: American Express, Visa or Mastercard?

    American Express stands out for its exclusive perks in comparison to Visa and Mastercard but comes typically at a higher cost. Amex has one of the largest airport lounge networks with unlimited access to 1,300 partnered lounges. Visa and Mastercard have more limited access in terms of their partners. Visa and Mastercard offer broader acceptance for payments worldwide, ensuring usability in most places. While American Express boasts a generous rewards program, Visa and Mastercard also provide rewards, although less extensive. In terms of customer service, American Express provides excellent 24/7 support, while Visa and Mastercard have support services with fewer resources. Ultimately, the best card choice depends on your preferences. If you prioritize exclusive perks and rewards, American Express is an excellent option. However, for wider acceptance and simplified payment options, and lower annual costs Visa or Mastercard may be more suitable.

    Is Visa better than Mastercard for international travel?

    Visa is slightly better than Mastercard for international travel. This is because Visa has over 44 million locations worldwide compared to Mastercard’s 37 million. This broader acceptance can be especially beneficial in remote areas or smaller establishments. However, both cards offer currency conversion services and travel insurance, providing valuable benefits. 

    Are all debit cards Visa or Mastercard in Canada?

    In Canada, only a minority of debit cards are provided by Visa or Mastercard. While Visa Debit and Mastercard Debit are indeed available, they are not the only debit card providers in the country. The primary debit card system in Canada is Interac, a domestic network that allows direct transfers between Canadian bank accounts.

    Are Mastercard and Visa the same company?

    No, Mastercard and Visa are not the same company. They offer similar financial services but serve as competitors rather than being the same company.

    Can I switch from Visa card to Mastercard?

    Yes, it is possible to switch from a Visa card to a Mastercard. This decision typically depends on your bank or credit card issuer, as they are the ones who decide which card networks they partner with. If your current bank offers both Visa and Mastercard products, you can request a switch. However, this might involve applying for a new card and possibly closing your current card, which could impact your credit score.

    Do Visa or Mastercard have better foreign exchange rates?

    Mastercard typically has lower exchange rate fees when compared to Visa. In addition to Visa and Mastercard’s FX fee issuers will typically charge a 2.5% flat fee non-dependent on the payment network. The Rogers World Elite Mastercard and the Scotiabank Passport Visa Infinite are cards with no foreign transaction fees. So if you are traveling frequently, these cards might be an option to consider.

    How do Visa and Mastercard make money?

    Visa and Mastercard make money by charging fees to merchants for every transaction processed through their networks. This fee, called an interchange or swipe fee, covers the cost of processing transactions between banks and also acts as a revenue source for both networks. Additionally, Visa and Mastercard generate revenue from other services such as merchant marketing programs, debit card acceptance fees, loyalty programs, analytics services, and venture investments. Some credit cards issued by banks may also carry annual fees to cover fraud losses and operational costs. Ultimately, this additional layer of income helps Visa and Mastercard remain profitable in the long term.

    How is American Express different from Visa and Mastercard?

    American Express is different from Visa and Mastercard because it operates as a payment network and card issuer. Both Visa and Mastercard rely on financial institutions to issue cards and just process transactions. whereas American Express partners with financial institutions and issues their own cards. American Express also charges merchants higher processing fees than Visa and Mastercard. Its acceptance is limited outside of North America and some domestic merchants choose not to accept it because of higher fees.

    Lucas, a Toronto native, holds an Honours Bachelor of Business Administration degree obtained from Wilfrid Laurier University. With a diverse professional background encompassing both startup ventures and established financial institutions, Lucas has cultivated a wealth of experience in his field. Additionally, his passion for exploring the world has taken him to an impressive 28 countries across Europe, North America, Asia, and Central America. Lucas's journey began as a content writer, where he delved into the intricate world of crypto/blockchain technologies, crafting insightful pieces to educate and inform readers. Building upon this foundation, he transitioned into the realm of consumer finance content writing.