Visa vs. Mastercard: explained
Natasha Macmillan, Senior Business Unit Director - Everyday Banking
Visa and Mastercard dominate the landscape of credit card options in Canada, offering a plethora of choices for consumers. These two credit card giants share many similarities and at times are almost indistinguishable from each other. Both Visa and Mastercard are widely accepted by most retailers, providing a range of rewards credit cards, cash back credit cards, and low interest credit cards under their badges.
That said, the choice between Visa and Mastercard remains a common question when selecting a new credit card. The truth is that there are some subtle differences that, depending on your unique spending patterns, may influence whether you should choose a Visa or Mastercard credit card.
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Mastercard vs. Visa: the remarkable resemblance
First of all, it's crucial to recognize that neither Mastercard nor Visa act as direct credit card issuers. It is not possible to obtain a credit card directly from these companies. Credit card terms, such as interest rates or reward structures, are not set by Mastercard or Visa. They also don't handle credit card applications or approval processes.
Credit cards are issued by banks or credit unions, commonly known as “issuers”. These organizations manage the credit cards, rewards, points, and associated debt incurred when using the card. When you make your monthly payment, borrow money, or owe interest, you’re doing so through your bank or credit union – not Visa or Mastercard.
Instead, Visa and Mastercard are processing networks and perform more of the behind-the-scenes operations. Both earn revenue by partnering with card issuers, acting as intermediaries between financial institutions and merchants. They manage the intricate process of digital transactions, ensuring your credit card can be used across an extensive network of establishments. For instance, every time you swipe your credit card, Mastercard or Visa collect a fee.
Mastercard vs. Visa: the subtle distinctions
While Mastercard and Visa are incredibly similar in their offerings (the more significant differences lie with the credit cards offered by the issuers), there are some differences that you should keep in mind.
Merchant acceptance
Visa and Mastercard are both widely accepted worldwide, with 44 million merchants taking Visa and 37 million accepting Mastercard. Notably, certain merchants, such as Costco, No Frills, and formerly Walmart (although this has changed), don't accept Visa. If you frequently shop at specific retailers, its a good idea to double-check that they accept your credit card of choice. Alternatively, you can maintain a second backup credit card to cover all of your bases.
Extra perks and benefits
Another noteworthy distinction relates to credit card perks and benefits. While issuers largely determine rewards and cash back benefits, Visa and Mastercard offer unique perks. For instance, a Mastercard credit card with airport lounge access will provide you with a membership to Mastercard Airport Experiences. On the other hand, Visa offers airport lounge access through Priority Pass.
Additional differentiation include complimentary Boingo Wi-Fi membership, and a unique partnership with Cirque du Soleil for Mastercard holders. Mastercard also offers cardholders access to Priceless Cities, an entertainment perk that offers deals and tickets to live events and culinary experiences. Visa meanwhile offers Visa Infinite perks on premium cards, providing a rotating roster of travel and lifestyle deals like complimentary wine tastings and a free fourth night at select hotels. While these perks differ marginally, they shouldn't be the sole determining factor when choosing between Visa and Mastercard.
Infinite vs. World Elite
Finally, there is a notable distinction in the premium tier cards offered by Visa and Mastercards. Premium tier cards are identified by specific titles: “Infinite” for Visa (for example, the CIBC Dividend Visa Infinite) and “World Elite” for Mastercard (like the BMO CashBack World Elite Mastercard).
Here’s a summary of the benefits for each premium tier:
Infinite:
- 24/7 concierge
- Up to 12 types of insurance coverage
- Visa Infinite Dining Series
- Visa Infinite Wine Country Program
- Visa Infinite Luxury Hotel Collection
World Elite:
- 24/7 concierge
- Up to 15 types of insurance coverage
- Mastercard Priceless Cities
- Cirque du Soleil
- Complimentary Boingo wi-fi membership
Income requirements
While the issuing bank or credit union determines eligibility, minimum income requirements vary for premium offerings from Mastercard and Visa. For example, Visa Infinite Cards require a minimum annual income of at least $60,000 (or $100,000 for households), while World Elite Mastercards demand an income of $80,000 (or $150,000 forhouseholds).
Depending on your annual income, Visa Infinite cards may be more within your reach.
Some of the best Visa and Mastercards in Canada
Best for Groceries & gas
based on spending $2,200/mo after the annual fee
- Earn rewards
1% – 4% / dollar spent
- Welcome bonus
$250
- Annual fee
see Details
The CIBC Dividend Visa Infinite offers an impressive 4% cash back on both groceries and gas - two of the most popular spending categories among Canadian households. This card also gets you 2% cash back on dining/food delivery, daily transit, and recurring payments, making it one of the most solid cash back cards on the market today.
Points can be flexibly redeemed in increments of $25 or more, and you’ll also receive some key insurance benefits, including out-of-province/country travel emergency medical insurance and mobile device insurance.
Best for Aeroplan Points
based on spending $2,200/mo after $139 annual fee
- Earn rewards
1pt – 1.5pts / dollar spent
- Welcome bonus
25,000 points (a $500 value)
- Anniversary bonus
15,000 points (a $300 value)
- Annual fee
$139 $0 first year waived
Aeroplan clients and frequent Air Canada fliers searching for a card to help them earn more on travel should look no further than the TD Aeroplan Visa Infinite. The biggest benefit of this card is that if you use your Aeroplan card in conjunction with this card at participating retailers, you’ll get double the points.
Best for Everyday spending
based on spending $2,200/mo after $120 annual fee
- Earn rewards
1% – 10% / dollar spent
- Annual fee
$120 $0 first year waived
If you’re looking for the best cash back Mastercard on the market right now, you’d be hard-pressed to find a better deal than the BMO CashBack World Elite. Cardholders will get an industry-leading 5% back on groceries, then 3% back on gas (including electric vehicle charging), 4% on transit and 2% on recurring bills. That’s a whole lot of value on one card. Plus, the annual fee of $120 is quite reasonable for a card with this much earning potential.
It’s also surprisingly flexible: there’s no limit to how much cash back you can earn, you’ll be able to redeem for as little as a dollar at a time, and you can spend your rewards on your statement, deposit it in a BMO bank account, or use it towards stock trading at BMO InvestorLine.
If you’re looking for a great all-around cash back card with no annual fee, the Tangerine Money-Back Mastercard might just be the perfect fit. With this card, you’ll earn an unlimited 2% cash back in two spending categories of your choice (there are a total of 10 categories to pick from, including everything from groceries, restaurants, gas, and more), and 0.5% on all other purchases. Plus, if you opt to have your cash back rewards deposited into a Tangerine Savings Account, you’ll get a third category earning 2% cash back (making opening a savings account with the online bank a no brainer).
In sharp contrast to the Tangerine Money-Back Card, most other no fee rewards cards from Mastercard (or Visa) either offer only two bonus categories, earn up to a maximum 1%, or have rewards caps that can put a ceiling on how much cash back or points you can collect.
The flexibility to pick your own bonus categories - to match your particular spending habits - is a standout feature and isn’t offered by any other credit card in Canada. Better yet, Tangerine lets you change your chosen bonus categories at any time (though, it can take one statement period for the changes to come into effect).
The bottom line
Bottom line: your choice for a new credit card should not be made solely on whether it’s a Visa or Mastercard.
There’s a wide variety of other criteria to take into consideration, like interest rate, monthly fees, rewards, and perks. These criteria will have a much more significant impact on the utility of your credit card choice than whether it is a Visa or Mastercard. That said if you are comparing two credit cards that are virtually identical in stats, the Visa or Mastercard label could indeed serve as the deciding factor in your final decision.