Introduction
In today’s world of science and technology, people resort to online payments or payments through cards because it is easy and less time-consuming. These cards, through which payment is being made are issued by their respective banks to their unique customers. The cards vary from each other and no two cards from the same bank are the same. There are various credit as well as debit cards developed by various banks. Out of those, Discover and Visa are the two most important card companies. Such cards allow for swipe and pay, online purchases, cash withdrawals from the ATM and various other credit and debit card facilities.
Discover vs Visa
The key difference between Discover and Visa is that Discover issues its cards. It is an issuer of a credit card despite being a card network. However, this feature of theirs limits the acceptance of Discover since it is only available via their limited network. On the other hand, Visa is only a card network that is responsible for processing any kind of transaction, thereby setting the rules for where and how cards can be used. Banks around the world issue unique visa cards to their unique customers. Compared to Discover, Visa has a wider usage and acceptance around the world than Discover. Both have their pros and cons in terms of usage and facilities. This article shall be dealing with the major distinction that exists between the two.
Differences Between Discover and Visa in Tabular Form
| Parameters of Comparison | Discover | Visa |
| Meaning | Discover is both a credit card issuer along with being a credit card network. | Visa, on the other hand, is only a credit card network. It does not issue any credit cards. Visa credit cards are issued by major banks around the globe. |
| History | Discover was originally introduced by Sears in 1985. However, in 1997, Sears sold off Discover to Morgan Stanley. It continued till 2007 when Discover became a part of the Dean Witter financial services. | Visa, on the other hand, was launched in 1958, by the Bank of America. Visa was previously known as Bank Americard which continued till 1970. It was in 1976 that the name was changed to Visa which started as a sole global network. |
| Rewards | Discover is a wonderful option for rewards on daily purchases like gas and eateries. It offers a few cards with rotating 5% cash-back categories. | Visa, on the other hand, is a good option for routine purchases. It's a great option for 1.5 per cent cash-back and tiered-rewards credit cards. It's also a great place to find appealing travel credit cards like the Capital One Venture Rewards Credit Card. |
| Cardholder advantages | Discover credit cards tend to be light on benefits. One can receive benefits like identifying theft, free overnight card replacement, 24/7 customer service and so on. The benefits are limited as compared to Visa. | The benefits one receives as a cardholder vary depending on whether one has a standard Visa credit card, a Visa Signature card, or a Visa Infinite card. Visa cards provide perks such as 24/7 customer service, roadside assistance, extended warranties, an auto rental accident damage waiver, lost luggage compensation, emergency card replacement, emergency cash advance etc. |
| Flexibility | Many companies do not take Discover, making it problematic. | Visa, on the other hand, is more accommodating than Discover. Visa credit cards are approved in more countries than Discover credit cards. |
| Foreign acceptance | The foreign acceptance of Discover is limited. Discover does have the benefit of no foreign transaction fees on any of its cards. Despite its presence in some foreign countries, there are only a limited number of merchants who would accept Discover cards. | Whereas, Visa has a good foreign acceptance of its cards. Almost around 200+ countries accept Visa credit cards. |
| Major issuers | Almost all cards on the Discover network are issued by Discover Bank only. | Visa cards, on the other hand, are issued by a variety of banks and credit unions, including Capital One, Chase, Bank of America, U.S. Bank, Barclays, etc. |
What is Discover?
Discover is a credit card brand that is issued by the American financial services company Discover Financial. It was originally formed by Sears in 1985. The very next year i.e. in 1986, Discover introduced its first credit card with groundbreaking features. The card was designed with the user in mind, offering cashback benefits, no annual subscription, and larger credit limits than other cards. This sparked a race among credit card companies to give the finest incentives to a diverse group of customers. Discover cards later became a part of Dean Witter's financial services. Following this, in 1997, Dean Witter Discover merged with Morgan Stanley, which lasted until 2007. Discover had to become both an issuer and a bank because it was not backed by any financial institutions. This restricted Discover's universal support. Though Discover was first sluggish to spread, however, it steadily extended its connection and it is now the seventh-largest issuer of cards globally.
Since Discover acts both as an issuer and bank, their credit cards are thus only available through Discover. This means that if someone wants a Discover card, they have to apply directly on the website provided by Discover only. Since Discover is also the sole issuer of cards, therefore, it creates a slight limitation while accepting the card in different places across the world. Although now the acceptance of Discover cards is increasing globally, there are only a limited number of merchants who like to accept such cards for purchase or transaction facilities. The card has high acceptance only in the USA and its limited acceptance in Asia, the Middle East, Europe and others.
Advantages of Discover
- There is a unique sign-up bonus structure.
- Emergency card replacement comes with a free overnight shipment.
- On any card, there are no yearly, overdraft fees, or international service charges.
- If customers fail to pay on time, the corporation will never raise their card's APR.
- With an on/off button in the app or website, users can freeze their cards to block future purchases.
- FICO Credit Score for Free.
Disadvantages of Discover
- It is not accepted everywhere unlike Visa or Master Card. It can create unwanted problems while dealing with small merchants, hence its limitations.
- There is no purchase protection.
- The initial rate for transfer fees is 3%, which is standard. But that deal won't last long. After a few months, the transfer charge rises to 5%, which is towards the top of the range for major credit cards.
- There are also no travel rewards.
- Because Discover serves both as an issuer and a bank, its credit cards are only accessible through Discover. This implies that if someone wants a Discover card, they must apply directly through Discover's website.
What is Visa?
Visa is a network of credit cards. However, unlike Discover, it does not issue credit cards on its own. Visa cards' origin can be traced back to 1958 when they were established by an America based financial institution known as the Bank of America. Previously, Visa was known as BankAmericard and was a part of it till 1970. It was only in 1976 that the name was changed to Visa which started as a sole global network. Since then, Visa has expanded into a transaction and technology processing company, allowing other financial institutions and banks to issue cards with its logo.
Unlike Discover, Visa is only a network and hence it does not have the facility of issuing a card in its name. Customers cannot apply directly for a Visa card rather they need to go to the issuing bank for the same. Today, Visa is the largest credit card network and offers dozens of credit cards to consumers. In terms of global acceptance, it has more to its credit than Discover. Almost about 200+ countries accept Visa and according to the logs of the card users around 3.3 billion users around the world uses Visa cards for payments and transactions. Even millions of small merchants accept Visa cards without causing a problem for the customers.
Advantages of Visa
- The perks that a Visa cardholder receives differ based on whether they have a basic Visa credit card, a Visa Signature card, or a Visa Infinite card. Visa cards provide benefits including 24/7 customer support, roadside assistance, extended warranties, an auto rental accident damage waiver, lost baggage reimbursement, urgent card replacements, emergency money loan, and so on.
- Better travel credit cards.
- There are more alternatives for earning 1.5 per cent cashback.
- For online and phone purchases, customers have a 3-digit security number to authenticate their identification.
Disadvantages of Visa
- The rewards and the benefits vary based on the card user and the type of cards they are using.
- The Visa cards may also have annual fees as well as foreign exchange fees along with different other fees.
- The cash-back programmes provided by Visa are less genuine compared to Discover. Visa, comparatively provide a less credit than the credits provided by Discover cards.
- One of the most risk factors for Visa is that it faces a lot of competition from its competitors like Alibaba, Paypal, Facebook, WeChat and so on. All these causes disruptions easily in the financial market.
Differences Between Discover and Visa in Points
- Discover is a credit card provider as well as a credit card network. Visa, on the other hand, is nothing more than a credit card network. It does not provide credit cards. Visa credit cards are issued by major banks worldwide.
- Visa is accepted in 200+ nations and territories by practically every merchant that accepts credit cards. Discover is accepted in over 190 nations and territories, yet many of those locations only have a few businesses that accept Discover.
- Discover is an excellent choice for rewards on everyday transactions such as petrol and restaurants. It has a few cards with rotating 5% cash-back categories. Visa, on the other hand, is a good option for routine purchases. It's a great option for 1.5 per cent cash-back and tiered-rewards credit cards. It's also a great place to find appealing travel credit cards like the Capital One Venture Rewards Credit Card.
- Despite being less accepted globally, Discover takes the lead in foreign transaction fees. While travelling to any foreign country, having a Discover credit card allows users to benefit from paying an extra amount as a foreign exchange fee. While, on the other hand, when it comes to Visa credit cards, there is a deduction of a 3 per cent transaction fee as a foreign exchange fee.
- Visa is the second most used credit card in the world. On the other hand, in terms of usage, Discover is the fourth largest used credit card in the world.
- Discover credit cards often provide little perks. Benefits include identifying theft, free overnight card replacement, and 24-hour customer service. In comparison to Visa, the Discover card perks are minimal. On the other hand, the perks that a Visa cardholder receives differ based on whether they have a basic Visa credit card, a Visa Signature card, or a Visa Infinite card. Visa cards provide benefits including 24/7 customer support, driver assistance, insurance products, auto rental accident damage insurance, lost baggage insurance, urgent credit card replacements, emergency funds and so on.
Conclusion
Hence, from the above discussion, it is seen that both Visa and Discover credit cards have their roles. Both have their pros and cons and it is up to us how we use them in various kinds of purchases and transactions so that they can benefit us in several ways possible. The fact that Discover is both a card network and a card issuer does not have anything to do with considering it as good or bad when compared to Visa. Both Visa and Discover consider their approval process to be exclusive so that there cannot be any hard and fast rules for the consumers to choose whether they can use any of the cards for their purchase or transaction. Visa cards hold a good option for earning good rewards as well as when one has to go for an international trip because it is accepted globally in almost every country and hence, is less problematic. Discover card, on the other hand, comes with no annual fee and no foreign transaction fee. It also comes with inbuilt security tools like free security alert numbers and overnight card exchange for free which proves its usage beneficial for customers.
References
- https://www.finder.com/discover-vs-visa
- https://wallethub.com/answers/cc/discover-vs-visa-2140663845/
- https://www.lendingtree.com/credit-cards/articles/discover-vs-visa/
- https://www.bankrate.com/finance/credit-cards/pros-and-cons-of-discover-vs-visa/#:~:text=Visa%20is%20a%20credit%20card,and%20a%20credit%20card%20network.
