So many choices!

There are so many payments networks available. Visa and MasterCard are the most prominent but then there is also American Express and Discover as well as Diners Club.  So what’s the difference and which should you pick?

Visa: Visa is the largest payment network in the US.  If you have a Visa credit card you can use it virtually at any shop that accepts credit cards.  It will be very rare to not be able to pay with Visa.  Visa also conducts fraud detection on transactions on your account.

MasterCard: MasterCard is almost as widely accepted as Visa.  They have a great global network and provide similar services such as fraud detection and secure transaction processing.

So, what’s the difference?

Honestly, very little.  As a consumer you are unlikely to notice any difference between Visa and MasterCard in terms of acceptance and the ability to make purchases.

What about fees and charges?

Some believe that those pesky late payment fees and over-the-limit fees are charged by the network like Visa or MasterCard.  However, that is untrue.  It is the credit card issuer, most likely your bank, that is charging this fee.  This is why fees vary depending on your issuer and the credit card you are holding. The interest rate or APR on your credit card is also determined by the issuer and bank and not Visa or MasterCard.  That is why selecting the right card is important.

MasterCard and Visa merely facilitate the transaction by linking the funds from merchant to issuer/bank while taking a small transaction fee based on the purchase amount.  But again, the consumer won’t see this fee as it is charged to the merchant/store and issuer/bank.

What about the other issuers?  Amex, Discover, and Diners Club

Amex or American Express is traditionally a premium brand that offers better services and benefits to its cardholders.  Also, on man Amex credit cards you are not permitted to revolve or carry a balance over from one month to the next.  The entire balance is due.  This has been changing recently and Amex have been releasing many new credit cards that allow the consumer to carry a balance and incur debt while charging an interest rate or APR.

Amex still holds prestige and claims better customer service and is widely accepted across Europe and in the travel sector.  However, I would not advise traveling or having only an Amex credit card in your wallet.  You’ll find yourself not being able to purchase something at a store.

Amex charges merchants a higher transaction fee than Visa and MasterCard claiming that the Amex brand and their customers will be better consumers.

Discover is another network that is essentially in the US.  Since they manage their own network they are able to offer better rewards and have the famous 5% cashback offers across different categories.  It’s a great credit card to have to maxmize your points, but like Amex, don’t let a Discover card be the only credit card in your wallet.

Diners Club used to be a super premium card targeting world and business travelers.  However, they struggled recently as Visa and MasterCard began to dominate and payment networks became consolidated.  Diners Club has since been integrated into the MasterCard network so it can be used virtually anywhere but they still offer better service although usually with a fee or if you’re lucky you can get a Diners Club through your company.