Fintech and Visa vs Mastercard

Executive Summary

The competitive dynamics of this industry are crucial to understanding its present structure, which various market forces have significantly influenced. Utilizing the five-force model by Michael Porter (Perera, 2020), we will evaluate the industry’s past and current structure, concentrating on the distribution of market leadership. The suppliers, buyers, threats of new entrants, threats of substitution, and competitive rivalry will all be considered in our analysis.

            These analyses will be focused on how the firms can leverage their strengths to maintain a competitive advantage, especially in the face of new challenges and opportunities brought about by technological developments such as blockchain technology (S. Allen et al., 2020) and central bank digital currencies (CBDCs). Through this analysis, we hope to provide a comprehensive understanding of the strategies that have enabled these firms to become leaders in their industry and how they can adapt to future market shifts. The paper aims to provide valuable insights and recommendations for the firms to ensure their continued growth and success in the industry.

PART 1 – Industry Analysis (Visa vs Mastercard)

            The competitive dynamics of the global financial transaction processing industry are intricate and highly contested, with Visa and Mastercard at the forefront. Exploring several vital areas can help us better understand their positioning within the industry. Porter’s Five Forces model provides a valuable framework for understanding the competitive dynamics of the industry (Grundy, 2006).

Supplier Power:

            The power of suppliers within this industry is relatively low (Hekmat et al., 2021). Financial institutions such as banks that issue Visa and Mastercard payment products do not exert significant control over these companies. Both Visa and Mastercard have a vast network of partnerships with numerous banks worldwide, which mitigates the risk of dependence on a single or a few suppliers (Croxson et al., 2023). They also maintain relationships with card issuers across various sizes and geographies, further diffusing supplier power. This broad network of banking relationships underlines the robustness of their operating models and contributes to their high transaction volumes (Mastercard, n.d.; Visa, n.d.).

Buyer Power:

            In contrast, the buyer power is relatively high within the industry. Both individual consumers and merchants represent the buyers in this context. Consumers have various payment options at their disposal, and their preferences can influence the market share of these card networks. However, Visa and Mastercard’s strong brands and wide acceptance make them popular consumer choices (Bounie et al., 2017). Similarly, merchants have a range of payment processing systems to choose from. Yet, the broad acceptance and reliability of Visa and Mastercard’s systems make them preferable to many merchants (Statista, n.d.).

Competitive Rivalry:

            The rivalry between Visa and Mastercard is intense, given their similar offerings and dominant market positions (Eisenmann et al., 2009). As of 2022, Visa held approximately 60% of the credit card market share globally, while Mastercard accounted for about 30%. This competitive landscape is less pronounced with other players like American Express and Discover, which hold considerably smaller market shares (Nilson, n.d.).

Threat of New Entry:

            The threat of new entrants is moderate to low. Although tech companies such as PayPal, Square, and Apple have launched their payment systems, penetrating the card-based payment processing market is complex and costly (Lerner, 2013). It requires substantial investment, regulatory compliance, and relationships with banks worldwide. These barriers to entry help preserve Visa and Mastercard’s dominant positions within the industry.

Threat of Substitution:

            This industry has a significant threat of substitution due to the advent of new payment technologies. Digital wallets, cryptocurrencies, and bank transfers pose potential alternatives to card-based transactions. However, Visa and Mastercard have adapted to these trends by integrating these payment methods into their offerings (McKinsey, n.d.).

Market Leadership:

            The leadership mantle in the global card payment industry is primarily shared between Visa and Mastercard. Due to its earlier inception and widespread acceptance, Visa typically claims a larger market share (Schnaars, 2002). However, Mastercard has persistently narrowed this gap by progressively increasing its market share. Although both companies maintain a considerable presence across various regions, their dominance varies geographically. For instance, Visa’s market share outstrips Mastercard’s in regions such as the US and Asia-Pacific, while the latter takes the lead in Europe (Euromonitor, n.d.).

            As the global financial transaction processing industry continues to grow amid rising global trade and consumer spending, it is teeming with challenges and opportunities for industry leaders like Visa and Mastercard. This intense competition mandates these firms to strategically leverage their strengths and adeptly navigate market dynamics to sustain their leading positions. Both Visa and Mastercard operate within this industry’s electronic payment processing segment, focusing primarily on credit and debit card services (Mandunga, 2023).

            With the industry witnessing consistent growth over the years, the market distribution remains dynamic. Due to its early roots and broader global reach, Visa usually enjoys a more significant share. However, Mastercard, over time, has shown remarkable growth in its market share. The distribution of leadership is relatively balanced in most regions, with minor deviations. For instance, Visa holds a more significant market share in regions such as the US and Asia-Pacific, whereas Mastercard outperforms Europe (Euromonitor, n.d.).

PART 2 – Competitor Analysis

            Visa and Mastercard have similar business models, facilitating electronic funds transfers globally, primarily through branded credit and debit cards. They do not issue cards or extend credit, but instead, they provide the technology and network that connect merchants, consumers, financial institutions, and government entities.


            Visa is the world’s largest retail electronic payments network and is among the most recognized global financial services brands. As of 2022, it operates in over 200 countries and territories and uses over 3.5 billion cards (Visa, n.d.). Visa is an American multinational financial services corporation based in Foster City, California. It is one of the two most prominent payment processing networks along with Mastercard, and it has a significant influence on the global economy due to its widespread use.

            Visa offers services to consumers, businesses, financial institutions, and governments, facilitating electronic funds transfers through its branded Visa credit, debit, and prepaid cards. Rather than issuing cards directly to consumers or providing credit facilities, Visa provides the infrastructure for authorizing, clearing, and settling payment transactions.

            As of 2022, there are over 3.5 billion Visa cards in circulation, used by millions of merchants around the globe. This broad acceptance underscores Visa’s reach and scale and is a testament to the strength of its brand. In terms of revenue, Visa generates income from data processing, international transactions, and service revenues. While the United States is a significant market for Visa, a substantial proportion of its revenues come from international operations, reflecting its diversified geographical presence (Visa, n.d.).

            Visa is also known for its innovation in the digital payment sphere. It continually invests in technology to improve security and convenience for its users. For instance, it has pioneered the development and adoption of EMV (Europay, Mastercard, Visa) chip technology, significantly enhancing security compared to traditional magnetic stripe cards. In summary, Visa’s significant size, global presence, strong brand recognition, and commitment to technology and security cement its position as the world’s largest retail electronic payments network.

SWOT Analysis:
  • Strengths – Global acceptance, strong brand recognition, and extensive merchant relationships.
  • Weaknesses – High dependency on the US market and susceptibility to currency fluctuations.
  • Opportunities – Increasing digital payments, expanding middle-class in emerging markets, growing e-commerce.
  • Threats – Regulatory challenges and increasing competition from digital payment providers.

            Mastercard is the second-largest payment processing network. It operates in over 210 countries and territories and, as of 2022, has issued over 2.6 billion cards (Mastercard, n.d.). Mastercard is a global technology company in the payments industry. Headquartered in Purchase, New York, Mastercard has been a driving force in the payments space since its founding in 1966.

            Like Visa, Mastercard serves as a processor for credit, debit, and prepaid card transactions, facilitating the transfer of value and information among financial institutions, merchants, consumers, businesses, and government entities. It plays a crucial role in powering electronic payments, thereby promoting the move towards a cashless society.

            Mastercard is the second-largest payments network globally in more than 210 countries and territories. This vast geographical presence enables it to serve consumers and businesses of all sizes, providing secure and efficient payment solutions. In 2022, Mastercard had over 2.6 billion cards in circulation, demonstrating its significant reach. However, its influence extends beyond sheer volume. Mastercard is renowned for its commitment to innovation, evident in its approach to emerging payment trends and technologies. The company is a pioneer in various areas, including contactless payments, digital wallets, and artificial intelligence (Wewege et al., 2020).  

            Specifically, Mastercard has been a leader in developing and promoting contactless payment technology, which enables users to make secure payments by simply tapping their card or smartphone on a payment terminal. This technology gained widespread acceptance, particularly after the COVID-19 pandemic, when contactless and digital payments became increasingly favoured due to their convenience and hygienic benefits (Sam et al., 2023).

            Furthermore, Mastercard has invested in machine learning and artificial intelligence technologies to enhance fraud detection and security (Ahangar & Salman, 2021). These innovative solutions provide the company with a competitive edge and help it meet the evolving needs of consumers and merchants in an increasingly digital and connected world. Financially, Mastercard earns revenue through transaction processing fees, cross-border fees, and other service fees. While it faces intense competition, particularly from Visa, Mastercard has maintained its market position by focusing on innovation, strategic partnerships, and robust security protocols (F. Allen et al., 2020).

            In summary, Mastercard’s global reach, innovative mindset, and commitment to providing secure and efficient payment solutions solidify its position as the second-largest payment processing network in the world.

SWOT Analysis:
  • Strengths – Strong brand recognition, robust security measures, and innovative technology offerings.
  • Weaknesses – Smaller scale compared to Visa, susceptibility to fluctuating currency values.
  • Opportunities – Increase online transactions, penetration into emerging markets, and potential for blockchain technology integration.
  • Threats – Regulatory issues, competitive digital payment industry.

            As the world’s largest retail electronic payments network, Visa leverages its scale and extensive global network to compete effectively in the market. Its presence in over 200 countries and territories, along with a base of more than 3.5 billion cards in circulation, gives it a broad reach and immense processing volume. This significant scale allows Visa to benefit from network effects, where the value of its services increases as more consumers and merchants use its cards for transactions (Alsharari, 2021). Moreover, its broad reach facilitates efficient cross-border transactions, an area that often faces friction in the payments industry. This high connectivity between consumers, merchants, financial institutions, and governments across different geographies underpins Visa’s competitive advantage.

            In contrast, Mastercard focuses heavily on innovation to maintain and enhance its market position. While boasting a broad global presence, it sets itself apart by deploying advanced technologies. Mastercard was an early adopter of artificial intelligence and machine learning to bolster security and detect fraudulent activities (An et al., 2021). Its commitment to technology-driven solutions extends to areas such as contactless payments and digital wallets, where it has made significant strides. Mastercard’s technological prowess enhances its product offerings and enables it to anticipate and adapt to emerging trends in the payments industry.

            In summary, both firms possess their unique sets of capabilities and resources. Visa leverages its massive scale and broad network, while Mastercard capitalizes on its innovative and technology-centric approach. Understanding these strengths is crucial for both companies as they devise strategies to outcompete each other and other payment industry players.

PART 3 – Consulting and Forecasting

            Visa and Mastercard have held a duopoly in the international card payments industry for several decades. Currently, Visa has held the top position due mainly to its expansive global network and ubiquitous acceptance by merchants worldwide (Pulina, 2011). A powerful cycle at work bolsters Visa’s leadership position; the larger the number of merchants accepting Visa, the larger the consumer base opts for Visa cards, and vice versa. Visa’s early entry into the market further cemented its position by providing ample time to establish robust branding and extensive banking relationships.

            However, viewing Mastercard as a distant competitor or incapable of challenging Visa’s dominion would be a mistake (Nkosi, 2020). Over the years, Mastercard has steadily chipped away at Visa’s market share. Its journey up the ladder is driven by innovative solutions, rigorous security measures, and strategic partnerships pushing financial transaction boundaries.


            Mastercard’s trajectory and growth potential suggest it’s well-poised to disrupt Visa’s pre-eminence in the industry. The strategy for this disruption revolves around a focused effort to enhance its already well-established capabilities in fintech (Christensen et al., 2011). More specifically, Mastercard should lean into the creation and investment of state-of-the-art fintech solutions and collaborations.

            In this age of rapidly progressing digitization, the world of finance is experiencing a seismic shift. Consumers and businesses gravitate towards faster, safer, and more convenient transaction methods. Mastercard, having already demonstrated its flair for innovation with advancements in AI, machine learning, and cybersecurity, is in an enviable position to capitalise on this trend (An et al., 2021).

            Mastercard must use its technological acumen and strategic alliances to drive growth and capture a larger market share to develop cutting-edge payment solutions. Such solutions should aim to surpass existing offerings in speed, convenience, and security, which are the primary metrics of customer satisfaction in this industry. For instance, investments in developing and integrating blockchain technology could offer unparalleled transaction speed and security, which are especially valuable for international payments (Fujihara & Yanagihara, 2022).

            Simultaneously, the company should explore opportunities in the fast-growing arena of digital currencies, specifically Central Bank Digital Currencies (CBDCs). With nations worldwide considering the launch of their digital currencies, there is immense potential for a payment processing network that can seamlessly handle these transactions. This would provide a service currently in its nascent stages and position Mastercard as a pioneer in a space with vast growth potential (K. Kim et al., 2022).

            The integration of blockchain technology and the support for CBDCs could be game-changers in the payments industry. They offer fresh opportunities for new entrants and incumbents like Mastercard to disrupt Visa’s market dominance. They could redefine the industry structure and dynamics, shifting the balance of power towards those who can effectively harness these innovative technologies (W. C. Kim & Mauborgne, 2015).

            In terms of impact, a strategic pivot towards fintech innovation and collaborations can drive a significant increase in transaction volumes, leading to higher revenues for Mastercard. The ability to offer faster, more secure transactions could draw customers away from Visa and other competitors, thereby increasing Mastercard’s market share. Moreover, this focus on innovation could enhance Mastercard’s reputation as a leading payment industry innovator (Binns et al., 2022). This image of a future-ready, progressive company could attract more customers and investors, driving up the company’s stock value.

            Finally, this move would help Mastercard consolidate its position in the rapidly expanding digital payments landscape (Renduchintala et al., 2022). The digital payments space will grow and accelerate in the coming years. Being at the forefront of this trend could give Mastercard a competitive edge over Visa and other competitors, allowing it to further close the gap with Visa and potentially overtake it.

            In conclusion, Visa’s current leadership in the global payments industry is not unassailable. Mastercard, with its strong foundation in innovation and strategic collaborations, has a clear path to challenge and potentially disrupt Visa’s dominance. By harnessing emerging technologies like blockchain and digital currencies, Mastercard can redefine what’s possible in the payments industry and set a new benchmark for others.


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