Both VISA and MasterCard are enormous companies that process almost every debit card in the world. However they do not offer their own debit cards.
It is important to understand what a debit card is. Essentially a debit card is a card that gives direct access to a bank account and is authorised to transfer money from that bank account to the bank account of the shop keeper or service provider that the card holder has just shopped with. The best way to think of it is like a cheque book.
The debit card can be used on a number of different types of bank account. Although the debit cards are traditionally used with transaction accounts, they can also be used in other accounts, including savings accounts, investment accounts, home loan accounts and lines of credit. They are very flexible cards.
However neither VISA nor MasterCard are banks and so do not offer these accounts. That means that all the debit cards that are processed by these payment card companies are in fact offered by other financial providers, who are usually banks but can also be credit unions, building societies or non-bank financial institutions.
VISA and MasterCard are instead card processors. Their role is to simply match the bank accounts of the card holder and the shop keeper or service provider who accepts the cards. If they did not do this then the shop keepers would have to maintain a large amount of credit card terminals.
In the past there were a number of country specific card providers, such as Bank Card in Australia, but over time they have either stopped offering cards or else they have merged with either VISA or MasterCard. This has meant that both VISA and MasterCard are accepted at almost 30 million banks around the world, by using hundreds of local banks.
VISA and MasterCard both started in California as credit card providers. VISA was started by the large San Francisco based bank, Bank of America when they realised that there was a gap in the market for revolving consumer credit and so they started the first successful credit card.
The forerunner to MasterCard was set up later by a consortium of large Californian banks who knew that they could not offer a credit card on their own. At first they both offered only credit cards, but debit cards – which use the same payment system but were better integrated into bank accounts – started to be offered in the 1980s.
