December 9, 2023

Business Visa

The Business Visa Is Mightier Than Sword

Definition, Types, How They Work, vs. Mastercard

What Is a Visa Card?

A Visa card is a payment card that uses the Visa network and is branded with a Visa logo. The San Francisco-based company began with just credit cards but later branched out to include debit, prepaid, and gift cards, as well. Although Visa cards bear the Visa name and logo, they are not issued by the company itself. Instead, they are issued by partner financial institutions, such as banks.

Key Takeaways

  • Visa cards are payment cards that use the Visa network for transactions.
  • They are not issued by Visa itself but by partner financial institutions.
  • Visa cards come with a 16-digit account number, microchip, magnetic stripe, and other features.
  • Types of Visa cards include credit cards, debit cards, prepaid cards, and gift cards.

How Visa Cards Work

Visa is a prominent processing network, and its cards are accepted by businesses in more than 200 countries and territories around the world. Other major payment processing networks include Mastercard, American Express, and Discover.

Financial institutions typically partner with a single processing network provider such as Visa for all of their payment card products. Each issuer sets its own terms and conditions for the Visa cards it offers and decides on the customers to whom it will offer them. Visa cards are available to individual and business customers through a range of financial institution partnerships.

Visa also partners with merchants through varying types of service agreements. Merchants that accept Visa cards pay Visa Inc. a transaction fee each time a customer uses their Visa card.

All Visa cards come with a unique 16-digit number that is printed or embossed on the front along with an embedded microchip intended to provide the cardholder with additional protection against fraud. There’s also a magnetic stripe on the back, with a panel for the cardholder’s signature and a three-digit validation code.

Although they’re branded with the Visa name, Visa cards are issued by financial institutions, not by Visa itself.

Types of Visa Cards

As noted above, there are several different types of payment cards that are branded with the Visa logo and that use the Visa payment processing network: credit cards, debit cards, prepaid cards, and gift cards. Here is how each of them works.

Visa Credit Cards

Banks and other financial institutions issue Visa credit cards to consumers whom they deem creditworthy based on their credit report and other information. Like other types of credit cards, Visa credit cards provide cardholders with convenience and security and can be used at merchants and automated teller machines (ATMs) around the world.

Depending on the particular card and issuer, some Visa cards have features such as 0% introductory annual percentage rates (APRs), cash back rewards, and special benefits when shopping with a particular retailer. All Visa credit cards come with the Visa Zero Liability Policy, which reduces cardholders’ liability for unauthorized transactions to $0. (Under federal law their liability is generally limited to $50.)

Visa cards can charge a range of fees, again depending on the card and its issuer. Those may include annual fees, foreign transaction fees, cash advance fees, balance transfer fees, late payment fees, and many others. The interest rate on the card is determined by the issuer.

Visa Debit Cards

Visa debit cards are linked to a cardholder’s bank account, typically a checking account. Like a credit card, they can be used to make purchases at retailers as well as to perform routine bank transactions at a branch or through an ATM. Unlike credit cards, debit cards do not extend credit but are limited to the amount of money in the cardholder’s bank account.

As with Visa credit cards, Visa debit cards come with the Visa Zero Liability Policy for unauthorized transactions.

Visa Prepaid Cards

Prepaid cards work like debit cards but are not associated with a bank account. Instead they come loaded with a specific amount of money that acts as a credit limit. This means the cardholder can’t spend more than the amount loaded onto the card. Visa’s prepaid cards can be used anywhere Visa is accepted and can be reloaded for future use.

In addition to its all-purpose prepaid cards, Visa has several types of specialized prepaid cards. Those include:

Payroll cards. Rather than issuing their employees checks or making direct deposits into their bank accounts, employers can pay them by regularly loading their pay onto a Visa payroll card, which then works like any other prepaid card.

Government payment cards. Some states use these cards to pay monthly unemployment benefits. The federal government also used them to distribute benefits as part of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

Visa Gift Cards

Gift cards with the Visa logo are preloaded with a specific amount just like a prepaid card and may be used wherever Visa is accepted. The principal difference between them and prepaid cards is that gift cards can’t be reloaded.

What Is the Difference Between Visa and Mastercard?

Both Visa and Mastercard are vast, worldwide payment networks and very similar in their operations. Neither issues its own credit cards but instead partners with banks and other financial institutions that do. Consumers with both types of cards in their wallets are likely to notice little or no difference between them. By contrast, American Express and Discover are also payment networks but issue credit cards through their own banking affiliates.

Does Visa Have Secured Credit Cards?

Yes, some financial institutions issue secured credit cards with the Visa logo. Secured cards are a type of credit card tailored to people with poor credit or little or no credit history. To qualify for one, the individual must deposit a sum of money in a bank account, which then serves as their credit line. After they have used a secured card for a certain period—and paid their bills on time—they can often graduate to a regular, unsecured credit card.

What Do the Microchips on Visa Cards Do?

The microchips embedded on the front of Visa cards (and other brands of cards) carry encrypted information about the cardholder and their account. They are designed to be more secure than the magnetic stripes on the cards’ backs, which carry much the same information. Most cards today have both chips and stripes because some merchants have not yet switched over to sales terminals compatible with chip technology.

The Bottom Line

Visa is a major payment card processing network, and cards bearing its logo are widely accepted worldwide. Whatever type of card a consumer might be looking for, a Visa-affiliated issuer probably offers it.