Credit card processing has changed dramatically over the years due to technology and increasing bank regulations. However, the principle remains the same in terms of customer loyalty and business-friendly merchant services. Visa and Mastercard are the most popular cards in the market due to their versatility and flexible banking options.
Universal Cards
Visa and Mastercard have been around for a long time. Most merchants are familiar with how cards under this sign will process. Visa and Mastercard are also widely offered with most banks that are both local and national. More importantly, credit card processing can function on both a banking and debit form as well. Most ATM networks are adapted to Visa and Mastercard for debit transactions. Customers may have a bank debit card that they use for both everyday ATM banking and purchases. Mastercard uses the large Cirrus ATM processing network and Visa uses the Plus network. When including Mastercard, most merchant accounts like to see a solid banking reputation first.
Reduced Chargeback Authorization and Merchant Red Tape
Some credit cards companies allow for consumers to initiate a chargeback or possibly accept returned merchandise if the store will not return it. Visa and MasterCard will usually provide more leniency towards the merchant accounts. Both cards function as an intermediary. This means that Visa and MasterCard do not issue cards directly. They are issued by the various banks and each bank will have different rules regarding merchant account regulations. This diversity allows businesses to pick and choose banks that work well for their services. American Express and Discover have a more direct role in regulation and customer satisfaction.
Lower Merchant Cost
One of the biggest reasons Visa and Mastercard remain dominant in the credit card processing market is a play in numbers. Visa and Mastercard simply charge less to merchants to process. American Express can charge 2.5-3% in merchant costs per transaction. Multiple transactions can add up quickly to lost sales. The increase in price is a result of batch sales and authorization that go directly to American Express and Discover. Visa and Mastercard send this information to the respective banks they are associated with. Most businesses also find lowered costs by linking services from their business savings or checking to the Visa or Mastercard merchant accounts associated with them.