What is the difference between MasterCard and Visa? –Jay, Evanston, Illinois
Best of Chicago voting is live now. Vote for your favorites »
Don’t get me wrong. Visa and MasterCard are separate firms and they do compete after a fashion. But they’re not like Pepsi and Coke. One Pepsi is pretty much the same as any other Pepsi, but a Visa card is not necesssarily the same as any other Visa card. Interest rates, fees, and other terms vary considerably. Though the Visa/MC split tends to disguise it, the real competition isn’t between brands, it’s among the thousands of banks who issue one or both of the cards.
A little history may clarify this. Visa started out in the 1960s as BankAmericard, which was issued by the Bank of America in San Francisco. To spread the card nationwide, Bank of America signed up other banks on a franchise basis. Each bank issued its own cards, set its own fees and other terms, and serviced its own customers under the BankAmericard name. Bank of America provided a clearinghouse for charge slips and merchant payments. Using a single brand with a central clearinghouse made for wide acceptance by merchants, which in turn made the cards popular with consumers.
