To ordinary consumers, names like American Express, Visa, and Mastercard are all synonymous with credit and debit cards that we use to shop, make payments, and basically use for most of our commercial activity. However, most holders of these cards don’t actually know that there are some key distinctions between them.
While they all essentially facilitate the electronic card payment process, an AmEx card is very different from a Visa and Mastercard because AmEx issues its own cards. To better understand this concept, let’s explore what it means in more detail.
Processing vs Issuing
Visa and Mastercard are companies that facilitate the processing of debit and credit cards, and electronic payments. What this means is that they work on a partnership basis with various banks around the world to process the payments made with cards issued by those banks. This gets a bit tricky since, together with American Express and Discover, Visa and Mastercard make up the four largest electronic payment processing companies in the world.
AmEx differentiates itself from Visa and Mastercard by the fact that it does the same thing they do — processes payments, but also issues the card itself to the customer. Cards that are processed by Visa and Mastercard aren’t issued by those companies. Those cards are issued by banks and the companies use their global networks to process any payments made with them. In short, the difference between them is that Visa and Mastercard are liaisons between the bank that issued the card, the customer making the payment, and the merchant to whom the payment is being made.
Cards that bear any of these four big brands can be used for a multitude of purchases. In fact, anything from ordinary shopping, to paying for services, and online shopping can be done with these cards. However, some card types are better suited for certain purchases than others. For example, modern industries like iGaming have branched out with many of the online casinos that dominate the industry today now offering AmEx as a depositing method, Sergio Zammit says. This means players can top up their gambling accounts using an AmEx card from their own homes, using just their phones if they want to.
Similarly, AmEx can be used for ordinary gaming too. As these industries continue to evolve and modernize their payment methods, cryptocurrency is becoming another popular payment method offered by them. As modern as this may seem, it doesn’t necessarily mean the roles of older payment methods like AmEx are obsolete since cryptocurrency itself has to be purchased before it can be used, and credit cards like AmEx can be used to buy it.
Visa and Mastercard as a Service
Despite the fact that Visa and Mastercard don’t extend credit or issue the cards themselves, they play a crucial role in the global reach those cards are able to have. Their network around the world creates an authentication system that enables payments to be made anywhere in the world for most goods and services that can be paid for with a bank card.
As the two biggest card and electronic payment processing companies in the world, Visa and Mastercard hold a combined market capitalization in excess of $800 billion. According to Yahoo Finance, Visa is bigger and operates in 200 countries, but Mastercard is faster. However, it’s recommended that customers have cards that utilize both services, for a wider reach.
American Express as a Hybrid
While American Express does offer the same service as a card payment processing company, it also issues customers with its own card and extends credit too. AmEx cards come with their own globally recognized network and also feature added incentives through its many rewards and perks. Through its partnerships with many well-known restaurants, hotels, travel, and retail protection AmEx is able to offer its customers a wide range of benefits that include everything from travel protection to discounted rates at hotels and restaurants.
While Visa and Mastercard are still the overall better option for a wider reach and greater choice of goods, outlets, and services they can be used for, AmEx makes for a great addition. This is especially true for people who travel a lot, eat out a lot, and often prioritize spending on entertainment, like gaming as mentioned above.
Whatever card(s) you may own, be it an AmEx, Visa, or Mastercard, companies like them continue to play a pivotal role in making global trade more accessible and convenient all around the world.