The Difference in Major Credit Card Companies
To the everyday credit card holder, there are three main contenders for their service: Visa, Mastercard, and American Express. The two former are usually grouped together and are known for their wide acceptance, while the latter usually stands on its own and is known for its exclusivity. Most cardholders, however, do not know the important differences between these companies.
Visa and MasterCard started advertising their general service cards in 1966. Today, most wallets carry Visa or MasterCard as they are the most widely accepted and are much easier to get. In actuality, these companies never issue credit cards themselves. Visa and MasterCard setup partnerships with banks and credit card companies who serve as the middle man to issue credit cards to their customers. The credit card companies are charged a fee for using the name on their cards and they in turn charge the customer. When you have a card from Visa or MasterCard, you never pay the companies directly.
The more seasoned company, American Express started in the mid-19th century competing with the U.S. Postal Service. The company didn’t, however, enter the credit card industry until the 1950’s. American express works differently from Visa and MasterCard in that they work with consumers directly. They issue their own cards and market themselves to the consumer. They are in charge of a consumer’s rates and rewards. Your credit comes from, and your money goes to, American Express. This is also the same method used, though not as popularly, by Discover.
However, consumers are most concerned with fees and usage. Because American Express’ business is done privately, they usually charge higher merchant fees. This is mainly the reason why today Visa and MasterCard is accepted in over 25 million locations in 170 countries while American Express can only boast 130 countries.
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