Visa and Mastercard

Visa International and MasterCard are best two credit cards in use today.

It was in 1958 when Bank of America started to issue BankAmericard in California. Later, in 1976, BankAmericard was renamed Visa.

In 1986, Visa looked to expand and affiliated with the Plus ATM network. This made it easy for Visa cardholders to access cash withdrawals. The advent of the internet in the 1990’s helped Visa introduce more innovations in transacting business.

Recently, Visa introduced Visa payWave or a “contactless” payment system. This feature enables cardholders to do transactions in places like a drive-through or a parking garage without swiping the card. It comes in forms of gadgets such as key fobs or mobile phones.

Visa reported an increase in card sales volume from US$4.0 trillion in 2005 to US$4.6 trillion in 2006. It has 1.55 billion cards in circulation that is accepted in 170 countries.

In 1966, a group of banks in the United States formed the Interbank Card Association (ICA) that first introduced MasterCharge. When ICA was bought by the California Bank Association in 1969, the credit card service was changed to MasterCard.

MasterCard expanded in 1988 and acquired the Cirrus ATM Network. The network enabled MasterCard holders the luxury of transacting business in 210 countries.

In 2005, a total of 749.3 million cards were issued by MasterCard, with a worldwide sales volume of US$1.7 trillion. In 2005, MasterCard had revenue of US$2.9 billion and a net income of US$267 million.

Like Visa, MasterCard has its version of contactless transaction. The PayPass system was introduced using state-of-the computer chips and antennae to complete a transaction.

Visa and MasterCard, the two best credit cards company in the world, control 75 percent of the US$1.3 trillion credit card market.

In 2001, the two companies figured in antitrust lawsuit. The Justice Department of the US sued the two companies to allow its members banks to sell or distribute other brands of credit cards. The lawsuit claims that through stringent “dual governance” in the industry doesn’t allow competition or innovation. Furthermore, the government claimed that Visa and MasterCard’s policy prohibiting members from issuing other credit cards limited companies from peddling their products to customers.

Judge Barbara Jones ruled in favor of Visa and MasterCard rejecting the government’s claim that the two credit card company structures didn’t adversely affect competition or consumer welfare. Experts opined after the ruling that it only affirms the state of the credit card industry—it is healthy and has a lot of products and services to offer consumers. The ruling is a loss for the government and victory for competition. Judge Jones even affirmed that Visa and MasterCard’s vigorous approaches in innovation benefited the consumers as they were afforded more services and offerings. The decision, however, didn’t lower existing rates. It showed, nonetheless, that intense competition could give consumers more than what they may have bargained for.

The other companies in the credit card market are American Express, Discover and Diner’s Club. They compete for the other 25 percent of the market.