Visa or MasterCard? That is the question

Let’s take a technical look at both cards.

Having been involved in the launch of both payment systems, I am often asked what the difference is between Visa and MasterCard cards? As it stands, all banks already issue both, and often add alternative options, such as MIR, CUP etc.

Let me provide some history.  In 2014, we (www.yoomoney.ru), a FinTech Startup became one of the principal issuers of MasterCard.

The reason for the launch was that the storage of customer funds had to be carried out outside the perimeter of the TSYS processing software, which is quite atypical and a non-standard condition. This was the start of an initiative which would greatly affect the future of the service as a whole.

So, starting with MasterCard, from the beginning we produced 2 versions of cards:

1) Virtual, which allowed the client to get all the details instantly, and only now is starting to fit into the logic of Digital First.

2) A Plastic card with NFC support, for those who needed more than virtual card.

I must point out that the advantage of the Digital First (Virtual First) scheme lies in the speed of getting started and the instant delivery to the client, whereas the disadvantages primarily lie on the security side with the monitoring of fraud.

This is due to the fact that the behavior of clients who have received the card free of charge and on an immediate basis, use it as a single payment instrument (they use it only once) and can then easily disappear of the radar. Tracking them is not an easy or enviable task.

In 2016 we actively started developing Pay. It began with Host Card Emulation technology which was reduced as the mobile phone memory is used to store the EMV profile of the card delivered via Google Push Provisioning, or FCM.

Although the technology is sound, it was initially distributed without strict controls and certification conditions to the Issuer's own cards. It was also not connected to Web services of payment systems, such as MDES.

This technology allowed us to cross our virtual card with NFC, making it look like plastic inside a phone, based on the Android operating system. Thus, we started ‘tokenizing our clients 'accounts’, issuing a "token" independently, without contacting MDES and bringing us closer to Digital First.

Unfortunately, due to the advent of MDES, the development of HCE technology in its original version was suspended.

HCE version 1 was replaced by version 2 and overnight a variety of ApplePay, AndroidPay, SamsungPay wallets appeared. These days there are many others, mostly linked to the manufacturers of Pay devices.

During the first wave of 2016, we were responsible for joining all of them available in Russia. Despite the fact that it proved to be a complex launch, this really changed the behavior of the customers. Because of the complexity of POS terminals, their internal software, and speed of operation, stores were not yet ready for this technology. When submitting quarterly statistics to MasterCard, it was quite clear that customers were actively using NFC in their phone and the volume of purchases were veering sharply towards 07 Entry Mode (Pay Pass- Contactless)

In this instance, the Grafana-based monitoring system turned out to be very useful, which showed real-time activity in the context of each connected Pay.

At the same time, HCE technology remains in demand as customers are used to its convenience inside our application and are still actively using it.

In 2018, having passed and adapted to most of the new MasterCard issuance technologies, we thought about an alternative in the form of Visa cards. This was not an easy step and it was primarily due to the fact that we, as a company, are also engaged in acquiring online stores (www.yookassa.ru)

Paradoxically, to start direct acquiring with Visa, you must also start issuing Visa, which is a huge, expensive and difficult step to take.

Not only are there differences to the color scheme logos but the 2 largest payment systems also have a number of differences that are not predictable or visible to the naked eye. Some examples of these differences are:

1) In MasterCard, the topology is based on the "Network" principle, unlike Visa, where new access points are connected via a "Star".

2) Visa Clearing files are text files and can be read by any editor, which is convenient in some cases.

3) Visa's file Handler (Edit Package) is a rather complex structure, unlike File Express in MasterCard. In most cases, Visa converts files on the fly. For example, VSS reports of the EP-130 type do not come from Visa, as it is done with T140 in MasterCard, but are generated locally by the Issuer. These files are important to us, because they are based on their automatic processing in Back Office where a reconciliation is done on the calculations of the net position.

4) Visa generates the Interchange amount based on 6 (!) decimal places. Even though this ensures accurate data, it causes problems in Russia where the minimum unit of payment is a “kopeika”, or 2 decimal places. The accounting systems are therefore not able to credit/debit accounts with that amount of accuracy.

5) Responsibility for the operation is not always evenly distributed in the same way as in MasterCard. For example, for an ApplePay transaction on the Internet, confirmed by fingerprint, Visa moves liability shift to the Acquirer, which causes havoc to payment schemes and slows down development. We are hopeful that, with the arrival of 3DS 2.0, this situation may change.

6) Visa sets Interchange rates of E-Commerce transactions higher than for Card Present. Despite for MasterCard it is vice versa. The reasons for this are not very clear; the POS Terminal is still much more expensive than accepting payments via the Internet. The element of risk may play a role here.

7) Visa does not add refund operations to its ARR0100 verification files despite the fact that MasterCard and their TN70 counterpart are aligned with this.

8) Visa rates include a charge for unsuccessful transactions with Acquirer (Billing Line 6J42_5215). In other words, the option to link the card to the service and constantly try to withdraw funds from it, even if the card is already closed, will be expensive not only for the Issuer of this card, but also for the Acquirer.

9) With the development of 3DS 2.1 / 2.2, Visa was the first to implement the ACSInd flag in the PRes message with the list of issuing banks.  This circumvented the problem of ‘’Not Enrolled cards’’ that were forcibly marked as 2.1 even though the issuers were not ready yet. This greatly simplified the Acquirer's life. MasterCard has, since then, also added this flag at home.

10) At the start of 2020 MasterCard removed all personal managers for banks not rated in the TOP 10 in Russia which greatly complicated the technical support process. Visa is still sticking with the status quo.

In summary, I have covered mostly technical points that don’t really affect the customer experience, nor is it understood by the average Bank customer. That is for us to take care of.

The customers rely on the marketing messages and promises made by both these companies. Currently Visa has significantly higher rates in Russia.