Visa vs. Mastercard

Confrontation... This word has a lot of meanings, and probably most of them are familiar to you. Confrontations can be honest and dishonest, serious and friendly, and even eternal.

Perhaps, I won't go wrong if I say that the most rigid and long confrontation on the economy market was competition of two giants, companies “Pepsi” and “Cola”. It was time when the employees of one of the companies were ready to scratch the eyes of the competitors out.

Electronic commerce is also goes forward and two big payment systems are confronting almost for 50 years. Electronic commerce also goes ahead, and nobody still has any reply to the question: “Who is the number 1”. I can say with a great confidence that it will be hard to answer this question in the near future, and every person will have his or her own opinion on this issue.

History in brief
The history of Visa goes back to 1958. Exactly that year the Bank of America has issued blue-and-white-and-golden card named BankAmericard. The popularity of cards of BankAmerica was growing so rapidly that in some period a separate organization “BankAmericard Service Corporation” was founded to support the cards. This organization was supporting all the operations with BankAmericard cards and have began selling the licenses for issuing of the cards to other banks. The name “Visa” came in 1976 and now this name can be met on the majority of bills and show-windows of any city.	This company was founded in 1966. It has taken place owing to an agreement between several American banks on forming of association named Interbank Card Association. 1968 is a year of international agreement with Mexican bank Banko Nacional. The same year was sighed an agreement with European system Eurocard as well, which started with strategic partnership of MasterCard International and Europay International. Combined name of the payment system was adopted in 1979, three years later than «Visa».
Types of the issued bank cards
-Visa Electron -Visa Classic -Visa Gold -Visa Platinum	-Cirrus -Maestro -Mastercard Mass -Mastercard Gold -Mastercard Platinum
Covered areas
Asia ; Canada ; Central and east Europe ; Middle East and Africa ; EU; Latin America and Caribbean region; the USA .	Asian-Pacific; North America ; Europe; the Middle East and Africa ; Latin America ; Region of Caribbean basin.
Annual turnover
Annual trade turnover of Visa cards is $2,5 trillions. Visa cards are accepted in sales outlets of more than 150 world countries. They are used by 21 thousands of financial organizations – members of payment system and their cardholders.	Annual trade turnover of MasterCard bank cards is about $2 trillions. Cards of MasterCard are accepted in more than 210 countries of the world. MasterCard plays a leading role in implementation of new payment technologies in the interests of 25 000 financial organizations, and also in the interests of 750 millions of MasterCard cardholders

Bank payment systems are considered for the maximum wide sections of the population. Today they emit from the cheapest to the most expensive cards. World market was devided between two payment systems Visa and MasterCard. These systems control more than 60% of the world market (approximately 40% by Visa and 25% by MasterCard).

While choosing this or that payment system it is necessary to consider a number of nuances. The first and the most popular is an area of distributional. Despite that both systems have appeared in the US, MasterCard became popular in Europe and Africa, and Visa in the USA, Latin America, Australia and Canada.

The second difference concerns payment by card. Working currency of Visa is US dollar. And hence in Europe the amount is converted twice – first into dollars, then into Euro. As the result – losses at double exchange. And MasterCard has the cards with the currency that is converted immediately into the currency being withdrawn.

But still there are no principal differences between VISA and MasterCard. Today they are almost equal payment systems in the number of the issued cards, services provided to the customers, number of commercial and service companies accepting cards as a payment method.

And here a question rises: why do some banks issue only cards of Visa, and others – of its main rival? As the bankers say, it is not the issue of financial benefit. Selection of the system mainly depends on the relations that have been occurred at these or that banks. In other words, it depends on who and with who makes friendship.

EU doesn’t want to support neither Visa nor MasterCard, which do not cancel their desire to get the whole market of cashless payment funds of Europe. And though it is too long till the realization of these plans but EU has already thought about the creation of European card similar to them.

Societe Generale, Deutsche Bank, Dresdner Bank, Commerzbank, UniCredit, ABN Amro, ING and Rabobank – all these banks are anxious about hegemony of Visa and Mastercard. These banks are afraid that the plans of Visa and Mastercard on domination in Europe can come true and the dissociation in the sphere of European payment tools can help these international competitors of US origin. So, their future in the Old World is far from being unclouded at the moment, but I would say quite an opposite thing.

Lately plastic card fraud has increased by 25%, though we cannot say which of the companies is more vulnerable. Both of the companies invest great amounts in the security but the fraudsters still find the way to avoid all the obstacles prepared by the programmers to them. Recently the customers of MasterCard are being more and more often attacked by the phishers. Phishing e-mail sent on behalf of MasterCard promises the cardholders some discounts for the future purchases. The fraudsters offer the users to clink on the link to register in the program of electronic payment security MasterCard SecureCode, and to get a discount of 16% for the future purchases made with the card.

Having clicked on the link the user goes to the phishing-site, where the user is asked to enter some data including expiration date of the card, date of birth of the cardholder and three digits of security code from the back of the card. And after this there is nothing easier than to get the funds from it.

The largest payment system Visa International has finished its initial public offering (IPO). Plastic card operator has offered the market almost half of its securities – 406 mln. pieces. They will appear on New York Stock Exchange on Wednesday under the ticker V. in the beginning offer price was $37–42 for a share but recently it has increased up to $44. As a result Visa has got $17,9 billions for them. And this amount became a record one.

Two companies have seized the market and process actively without staying on one place. It seems that their rivals are simply cannot keep pace with them, and as the result these two companies become more and more popular with the people. If I were asked which system of two ones is more powerful, I would not answer this question, as both of the companies can be compared with the GIANTS in the country of Lilliputian. And though MasterCard appears in mass media more often we cannot say that Visa loses. I would say that the representatives of the latter company are more conservative, and as it is known the conservatism is not a bad strategy. In principle, two companies have divided the zones of influence: MasterCard runs in Europe and Visa in the USA. But the latest news has shown that Europeans are against monopolists and want to create something of their own in contrast to American companies. It is also an interesting move. And if it were a football match it would be ended in draw, which would be ended by the additional time and a penalty shoot-out.

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