The Battle of the Payment Networks: Visa vs. MasterCard

In the fast-paced world of financial transactions, two giants stand out: Visa and MasterCard. These two titans of the payment network industry have been competing for market dominance for years, and the landscape continues to evolve with each passing year. A recent infographic by Joshua Novick provides a striking visual representation of the current state of affairs.

Visa has long been recognized as the market leader in the payment networks sector. It was tied with MasterCard 15 years ago but now boasts a 36% larger market size. In 2022, Visa reported $30.2 billion in revenue, whereas MasterCard reported $22.2 billion. This gap is also reflected in their respective revenue growth rates, with Visa showing a more consistent upward trend over the past five years compared to MasterCard.

Visa’s dominance is further highlighted by its share of card transactions. In 2022, nearly 40% of card transactions were Visa-branded, involving 242 billion purchase transactions worldwide. Visa also overshadows MasterCard in the number of cards in circulation, with 4.25 billion Visa cards compared to 3.30 billion MasterCard cards as of September 2023.

When looking at market capitalization, Visa stands at a colossal $530 billion as of December 23, 2023, significantly outpacing MasterCard’s $395 billion. The infographic also presents the EBITDA/EV (Earnings Before Interest, Taxes, Depreciation, and Amortization to Enterprise Value) ratio, with Visa at 22X and MasterCard at 27X, suggesting a difference in valuation and profitability metrics.

MasterCard seems to invest more aggressively in marketing and ads, with a spend of $789 million compared to Visa’s $403 million, according to the last full-year report. This difference could be indicative of MasterCard’s strategies to capture more market share and increase brand visibility.

The average credit card transaction in the U.S. is $90.89, and Visa’s gross dollar volume in transactions was a staggering $15 trillion last reported year, almost double that of MasterCard’s $8 trillion. Despite these figures, both networks charge a mere 0.2% in fees, showing the thin margins on which they operate.

An interesting statistic revealed is that 70% of Visa cards are debit cards, which may reflect consumer spending habits and preferences. Geographically, Visa’s revenue is split with 44% coming from the USA and 56% from the rest of the world, while MasterCard shows a greater dependency on American markets with 78% of revenue domestically sourced.

The “Visa Universe” encompasses 14,500 financial institutions and 130 million merchant locations, illustrating the vast reach of its network. Both Visa and MasterCard show robust Compound Annual Growth Rates (CAGR) over the last 5 and 15 years, with Visa slightly leading in recent growth.

The infographic by Joshua Novick, endorsed by LinkedIn as a “Top Voice” and presented by BONDO Advisors, paints a clear picture of the competitive dynamics between Visa and MasterCard. Visa appears to lead in most metrics, but MasterCard’s aggressive marketing spend and significant presence in the market make it a formidable challenger. The ongoing battle between these two payment networks is not just about numbers; it reflects their strategic approaches to growth, innovation, and customer reach in a world that increasingly relies on digital payments.