Credit Card Companies

When you start shopping around for a new credit card, you’ll notice they are usually sorted by type (i.e. rewards, low interest, etc.) and/or by lender (i.e. bank, credit union, etc.). But there’s a logo on every card that identifies the provider and that’s the credit card company.

Credit card companies (also known as credit card associations) are the financial organizations that license credit card programs to various lenders. The companies are not responsible for distributing cards to consumers; they simply provide lenders with credit card branded products they can offer clients, then approve accounts, extend credit limits, and charge fees to both the consumers who use their cards and the merchants that accept them.

In Canada, there are three major credit card companies that operate: Visa, MasterCard and American Express. If you’re one of the 91% of adults in Canada who have a credit card1, it’s likely managed by one of these three companies. Keep reading to find out more about each of them.

Credit Card Company Market Share of Purchase Transactions Made Worldwide in 2013
Visa 60.5%
Mastercard 26.9%
American Express 3.8%

Visa

Headquartered in Foster City, California, Visa is the largest credit card company in the world. In fact, The Nilson Report showed that Visa held 60.5% of the market share of purchase transactions made worldwide in 20132.

The company’s roots trace back to 1958, when Bank of America launched its first credit card: the BankAmericard. In the 1970s, BankAmericard became an independent entity that was eventually rebranded as Visa. After growing and operating as a series of regional entities by banks across the world, the regions merged to form Visa, Inc. in 2007. Visa, Inc. went public in March 2008, and trades on the New York Stock Exchange (NYSE) under the symbol V.

Today, Visa operates in more than 200 countries, and is well known for both its Visa credit card and Visa debit card products.


Mastercard

Headquartered in O’Fallon, Missouri, MasterCard is the second largest credit card company in the world. Infamous for its catchphrase, “For everything else, there’s MasterCard,” the company held 26.9% of the market share of purchase transactions made worldwide in 2013.

After seeing the success of Bank of America’s BankAmericard, several California banks came together to create Interbank. In 1966, Interbank launched its first credit card: Master Charge: The Interbank Card. In 1979, Master Charge was renamed to MasterCard, which is the name it has operated under ever since. The company launched its “Priceless” advertising campaign in 1997, which remains one of the most notable campaigns by consumers worldwide. MasterCard went public in 2006 – two years before Visa – and trades on the NYSE under the symbol MA.

MasterCard operates in more than 210 countries, and is known for both its credit card and prepaid card products.


American Express

Headquartered in New York City, American Express (also known as Amex) is a multi-national financial services corporation that offers credit card, charge card and traveler’s cheque businesses. While Amex cards are said to account for 24% the total dollar volume of credit card transactions in the U.S. 3., The Nilson Report showed that American Express held just 3.8% of the market share of purchase transactions made worldwide in 2013.

In 1850, the same founders of Wells Fargo & Co. launched American Express as an express mail business. In 1882, American Express began to expand into financial services, by offering money orders that would compete with the United States Post Office’s money orders. During a business trip in Europe, one of the founders of Amex became so frustrated by how difficult it was to get cash anywhere that he decided to create a solution. Traveler’s cheques launched in 1891 and remain one of the most popular services that Amex offers. The company went public in 1997 and trades on the NYSE under the symbol AXP.

American Express operates in more than 140 countries.


Differences Between the Credit Card Companies

Despite the fact that all three credit card companies offer similar rewards, and charge similar fees and interest rates, there is one key distinction between them: they are not all accepted by the same vendors. For example, the only credit card Costco accepts is American Express. For years, Tim Hortons only accepted MasterCard – and it wasn’t until 2012 4 that they finally accepted Visa, but they still don’t accept American Express. It’s rumoured that most vendors don’t accept American Express because the fees are more expensive than what the other two companies charge, which is likely the reason behind all differences in who accepts what. If that’s the case, it’s easy to see why some Canadians would want one of each in their wallet.


References and Notes

  1. Credit Cards: Statistics and Facts, Canadian Bankers Association, March 2014
  2. Market Shares of Purchase Transactions Worldwide 2013, The Nilson Report, March 2014
  3. American Express, Wikipedia, April 2014
  4. Tim Hortons, Tim Hortons, 2012