Visa Mastercard American Express Comparison Essay

CREDIT CARD HELP: The basic fundamentals of credit cards

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Picking the right card


Visa, AmEx, MasterCard, Discover -- What's the difference?

By James Peter Rubin

Credit card companies are like watches. As long as they work, you don't worry much how.

That said, their inner mechanisms may differ markedly.

You can group the four most familiar credit card companies in pairs with Visa and MasterCard using one system of transaction and American Express and Discover another.  There are other differences between them, too. Below you'll find a summary of how each pair of cards operates, their histories and other distinctive points:

Visa, MasterCard 
Visa and MasterCard do not issue cards. Rather, they function as intermediary organizations creating networks between financial companies, including major banks and credit unions that issue cards bearing the Visa or MasterCard name, and merchants providing goods and services. The issuer, a term describing the banks, and merchants pay fees to participate in the Visa or MasterCard networks. Visa and MasterCard set and maintain rules governing use of their branded cards.

When a cardholder requests a purchase via either Visa or MasterCard, it triggers a multistep processes. The merchant submits the charge to his or her bank, which requests authorization from the issuer of the card. If there are enough funds available in the cardholder's account, the issuer, and subsequently the merchant's bank, can authorize the transaction.

At the end of a business day, a merchant sends a batch of sales receipts to its bank, which distributes them to the appropriate issuing organizations. For example, the merchant's bank will send separate batches to Chase, Bank of America or Barclays.

Each issuer subtracts a fee from the amount charged. The issuer shares this fee with Visa or MasterCard. The card network sends the remaining amount to the merchant's bank, which subtracts its own fee before advancing a final total to the merchant.

Visa and MasterCard birthed the first general service credit cards in 1966. First, Bank of America created a division franchising a card that later became Visa. At about the same time, a group of banks created a member-owned association, the InterBank Card Association, which is now MasterCard Worldwide.  Both organizations developed an open-loop system that enabled banks to cooperate seamlessly on fund transfers. For much of the groups' histories, financial institutions that wished to issue a card had to select one of the two.  But rules changes now allow them issue Visa and MasterCard in both networks.

The end result has been an extensive worldwide presence. Both cards may be used at more than 25 million locations in 170 countries.

American Express, Discover
Whereas the Visa and MasterCard systems engage many organizations, American Express and Discover are akin to one-stop shops. That is, they issue their own cards, authorize purchases and settle both with consumers and merchants.

American Express's roots date to the mid-19th century when the company was a competitor to the U.S. Postal Service. It invented travelers checks in 1891 but didn't enter the credit card business until the late 1950s when it introduced a charge card for travel and entertainment expenses. AmEx was first to market with a plastic card, although it didn't allow revolving payments until 1987; prior to then, it required customers to pay their balance in full at the end of each month.

American Express generally charges merchants a higher fee. That may account for its lesser reach than Visa and MasterCard. American Express says its cards are accepted in more than 130 countries.

Discover was introduced in 1985 by retailing giant Sears in its expansion into the financial services industry. It was sold to Dean Witter, which was later acquired by Morgan Stanley. In 2007, Discover became its own company, Discover Financial Services. In 2008, the company purchased Diner's Club, and in doing so, broadened its acceptance overseas.  

Published: April 9, 2009 

CREDIT CARD HELP: The basic fundamentals of credit cards



CREDIT CARD HELP: The basic fundamentals of credit cards


How do I choose which is best for me?

These three companies are perhaps the only few big names in credit cards in the world today. For most banks in Singapore though, the more common brand of credit or debit cards would come from MasterCard and Visa.

The great thing about having these stamps on your card is that it enables anyone to be able to make purchases over the internet or in the shops in Singapore. The bad thing? With so many choices, it can be rather difficult to pick and choose which credit card suits you best.

But what are the differences between them anyway?

Differences between Amex, Visa and MasterCard 

Before we get into the thick of this conversation, it is quite important to know that firstly, these differences exist mainly due to the various benefits and offers that the cardholders can receive. For example, rebates when using a card. A good example of this would be POSB Everyday Card with MasterCard, which offers rebates on grocery goods after spending a certain amount, or Citibank’s Premier Miles card in conjunction with Visa, providing flyer miles per dollar spent using said card.

Unfortunately, because MasterCard and Visa are so incredibly competitive with each other, both are also awarded the Best Travel Credit Cards in America. This should probably give you a base idea of how well covered these companies are in the fields of Travel, Lifestyle and living in general.

To further compound the issue, the majority of the MasterCard and Visa cardholders can use their credit cards in almost every part of the world, whether to withdraw money at a higher fee or to purchase goods and services internationally. With the international footprint of MasterCard and Visa being so large, it makes it tough to define which company provides the best regarding deals and discount privileges.

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Then, of course, there are the business credit cards. These are usually offered by the larger companies for their employees (i.e. MasterCard, Visa, and the big auditing firms’ employees). These usually are issued when the company needs to send people out of the country (or in larger countries, between states and cities) for business reasons. The corporate individual cards usually offer somewhat better benefits and advantages like better discounts and lowered interest rates for borrowing thanks to the negotiations with the company on behalf of its employees.

Special mention goes towards American Express – or Amex. Once one of the powerhouse companies in the world (particularly so in Singapore many years back!), now it would seem Amex has been very much dwarfed by the 2 other giants in the credit card world. This is not to say that Amex is totally redundant; Amex still has a very strong presence particularly in the United States and Canada.

If you’re planning on doing business within the North American continent, having an Amex card could also serve you well regarding getting any bank loans and purchasing goods and services at perhaps a slightly lower interest rate than either MasterCard or Visa.

With so much said about these credit card companies, we go back to the question of choosing which would be the best amongst the companies.

The truth is, we can’t tell you which is best; you’ll have to decide that for yourself.

Of course, we’re not going to leave you just like this.

Here’s a list of benefits and comparisons of credit cards for your viewing pleasure. Hopefully, these will help you decide which would be best for you!

Amex, Visa and MasterCard

MasterCardVisaAmex
TravelAccepted in more than 210 countries

ATMs allowing cash withdrawal found worldwide

Accepted in more than 200 countries

Emergency services available 24/7, as well as emergency card replacement available in 1 business day

Accepted in 140 countries

Reward points can be used on the Amex travel site

Security-Monitoring services detect any fraudulent card usage

– Zero liability protection applies once card is reported stolen or lost

– Monitoring services also detect fraudulent card usage

– Zero liability protection also applies, but not to ATM transactions (before reporting)

– Monitoring services also detect fraudulent card usage

– Fraud protection covers user without deductibles

Customer Service-24/7 emergency service operators worldwide

-Mastercardconnect available for international customer service

– V.me digital wallet services launched in N. America and Europe– Mobile app and alerts through email and text
Returning/exchanging-Purchases covered for 90 days from theft/damage with restrictions

– Extended warranties for manufacturer warranties under 1 year

– 90-day protection from damage and theft

– Extended warranty if manufacturer’s warranty is under 3 years

– 90-day protection from damage and theft

– Extended Warranties for one year on merchant warranties up to five years

 

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Anna V. Haotanto

http://thenewsavvy.com/

C.E.O @ The New Savvy

Anna Haotanto is the CEO of The New Savvy. Anna is the President of the Singapore Management University Women Alumni. She is part of the founding committee of the Singapore FinTech Association and heads the Women In FinTech and Partnership committee. She is passionate about finance, education, women empowerment and children’s issues. Anna’s story is featured on Millionaire Minds on Channel NewsAsia. She is the host for Channel NewsAsia for Challenge Tomorrow, a FinTech documentary. Anna was awarded “Her Times Youth Award” at the Rising50 Women Empowerment Gala, organised by the Indonesian Embassy of Singapore. The award was presented by His Excellency Ngurah Swajaya. She is part of LinkedIn Power Profiles 2017 for founders. She was nominated and selected for FORTUNE Most Powerful Women conference in 2017, 2016 (Asia) and 2015 (San Francisco, Next Gen). Anna has been featured on CNBC, Channel NewsAsia, Forbes, The Straits Times, Reuters Mone.y, Business Insider, The Peak Magazine, INC, The New Paper, The Edge Singapore & Malaysia, Oxford Said Business School, AsiaOne, Singapore Computer Society, Vulcan Post, e27, eFinancialCareers, Singapore Women’s Weekly, 8Days, Asian Entrepreneur and Singapore Management University. She headlines the infocommercial for Lifetime Asia: What does a boss look like? with over 1.7 Million views. She was the keynote speaker for ASEAN-China Young Entrepreneur forum.

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