Discover is neither a Visa nor a Mastercard. Discover is different from Visa and Mastercard in that most credit cards on the Discover network are issued by Discover. Visa and Mastercard aren’t issuers, so cards on their networks come from lots of different banks and credit unions. Amex, like Discover, is both a card issuer and a card network.
Visa and Mastercard
Is Discover Visa or Mastercard? Let’s start with Visa and MasterCard. They aren’t the companies that actually offer you credit cards. They don’t loan you money, either. The credit card offers — and the credit itself — come from a bank, credit union or other financial institution, known as an issuer. Each issuer sets the specific terms of the card, such as the interest rate, meaning that you can have two Visas or two MasterCards from two different issuers with significantly different terms. The issuer is also the party that takes the hit if you fail to pay off your card.
Visa and MasterCard are called payment networks; they’re basically the computer systems that allow for processing of credit card transactions As a cardholder, you won’t find big differences between them. They both provide a variety of benefits. For example, they set caps on limited liability if a card is lost or stolen and the ability to charge back damaged merchandise. Many merchants accept both kinds of cards for purchases. Both say they’re accepted by more than 20 million merchants in more than 150 countries.
Discover is a bit different. Its cards are not as widely accepted as those with the Visa or MasterCard logos. Also, it issues its own cards through Discover Bank, along with partnering with several other issuing banks. The cards gained popularity by offering cardholders a cash-back bonus, calculated as a percentage of purchases.
American Express has an even more unusual story. The company built a reputation as an “exclusive” lender for select clients rather than for the everyday guy. Originally, it issued all of its own cards, charged high annual fees and only dealt in charge cards — accounts that had to be paid off in full every month. Times have changed, however. It still runs a payment network, issues cards and generally has a reputation for being more of a high-end card than Visa, MasterCard or Discover, but it has begun partnering with other issuing banks, too. In addition, it now offers credit cards — which allow cardholders to carry a balance — along with charge cards.