Mastercard vs Visa

DRAFT
Updated 3 October 2018
Go overseas and use your credit or debit card and you'll pay a foreign currency commission on top of the exchange rate on the day of your transaction. Banks charge different amounts for their transaction commissions, ranging from 1.85% to 2.60%.

The purpose of this page is to demonstrate the difference in the foreign exchange (FX) rates used by Mastercard and Visa. You may think the card providers would have the same foreign exchange rate; our in-depth research between proves otherwise. We analysed a range of currencies throughout 2017 and 2018 to determine the best credit card to use for overseas purchases (i.e. online shopping) or to use overseas. Our research was based on each bank's FX commission fee and Mastercard and Visa's average daily exchange rates. 

Why is this important?
  • We found the best cards (Kiwibank's Mastercard range) could make a difference of over 1% of the purchase value when compared to ANZ, TSB, Westpac and Heartland bank's credit card selection.
  • 1% does not sound like much, but get the wrong card and you could easily pay $100s more in fees and commissions unnecessarily if you spend over NZ$10,000 a year on your credit card on overseas purchases.

Our guide covers:

Mastercard vs Visa - Mastercard usually wins in all of the currencies we surveyed

We had read online that Mastercard's FX rates beat Visa when it comes to spending money overseas. But we didn't know if this was the case for popular currencies such as the USD and AUD, or all currencies. To find out, we took the published wholesale exchange rates between October 2017 and October 2018 from the Mastercard and Visa websites. We picked four dates a month and used a range of currencies New Zealanders use when they go overseas. The data we gathered provided us with enough information to compare. 

The result was striking - Mastercard...

How much better is the Mastercard rate than the Visa rate?

The charts above are proof that Mastercard gives better rates than Visa for every currency we analysed, but the difference is less than 1% in almost every instance (CHECK DATA).

To make sense of our results, we've analysed the Visa FX rates by setting the Mastercard rate as a benchmark. In the graphs below, we show the Mastercard rate as 100 (the benchmark). We then compare this to the weekly Visa FX rates.
Graph summary line - "NZD to Mexican Peso, Mastercard vs Visa FX rates between October 2017-18 (Mastercard's exchange rates were 0.XX% higher than Visa's") (for each currency)

Overall Results
  • For every currency, the results are fairly close. The axis on the graphs is enlarged to show the Mastercard advantage, which is the winner in all of the ten currencies we looked at. 
  • On average, from all of the currencies we analysed, Mastercard's exchange rates were as high as 0.XX% higher than Visa's for XXX (currency name) and as low as 0.XX% for XXX (currency name).
  • While we haven't checked every day and more than the ten currencies selected, we believe it is very likely that the data we obtained shows a pattern that would apply to the majority (if not all) of the FX rates offered by Mastercard and Visa. 

What does Mastercard having better FX rates than Visa mean in practice?
  • Quite simply, Mastercard will give you a better exchange rate for purchases made overseas than Visa.
  • But, your bank also applies a fee for 'currency conversion assessment' on top of the Mastercard or Visa rate. 
  • This can range from 1.85% (Kiwibank credit cards) to 2.50%  (ANZ, TSB and Westpac credit cards and debit cards).

What is the best credit card on offer? 
  • The best card on offer is one which is a Mastercard and has Kiwibank's relatively low 1.85% currency conversion fee.
  • Kiwibank offers a range of such credit cards, with annual fees ranging from $0 to $150 - see more information on the Kiwibank Mastercard fees page.
  • If you make purchases online, travel often or just want to know you are getting the best value for money, a Kiwibank credit card is the way to go.
  • Conversely, if you don't spend a lot in foreign currencies on your existing credit card, it may not be worth changing.

Our research
  • Our research has stated the differences between Mastercard and Visa FX rates for ten popular currencies used by New Zealanders for online shopping and/or overseas travel. 
  • The average 0.XX% difference between the two exchange rates will only amount to a few New Zealand dollars' difference over the course of a holiday. Using a Visa instead of a Mastercard and spending AUD 2,000 is likely to cost an extra NZD 10, excluding bank fees.
  • See our Best Bank Currency Conversion guide for more details about different bank fees.

Are there any other differences between Mastercard and Visa?

  1. In New Zealand, you won't really notice any difference between Mastercard and Visa – your card's issued in New Zealand dollars and you spend in New Zealand dollars, so exchange rates don't affect you.
  2. Both Mastercard and Visa are accepted throughout New Zealand and worldwide by millions of retailers.
  3. If a retailer accepts Mastercard, in almost all cases it will accept Visa, and vice versa. There is not the same for Amex, which has relatively less coverage in comparison.

Best Buys - Credit Cards for Overseas Purchases

Because Kiwibank offers a 1.85% currency conversion fee, well below the 2.10% offered by ASB, 2.25% offered by BNZ and 2.50% to 2.60% offered by the rest of the banks, it ultimately offers the best-buy credit card options for anyone travelling overseas or making regular purchases in foreign currencies. We have listed these below we consider to be the best buys for those wanting to save the most on everyday transactions in foreign conversions.
Overseas Currency Conversions Charges - New Zealand Banks
Value
Kiwibank
​Credit Card
ASB Debit &
& Credit Cards
​BNZ Debit &
& Credit Cards
ANZ, TSB, Westpac
Credit & Debit Cards
Kiwibank
Debit Cards
Co-operative Bank
Debit & Credit Cards
Currency Conversion Fee
1.85%
2.10%
2.25%
2.50%
2.50%
2.60%
Fees correct in October 2018, obtained from ANZ, ASB (credit card), ASB (debit card), TSB, ANZ, Westpac, Kiwibank (debit card), Westpac (debit card), BNZ, SBS Bank and the Co-operative Bank 
Best Low Fee/Free Credit Card
Card: Kiwibank Mastercard Zero
Annual fee: $0
International ATM withdrawal fee: $6
Overseas currency conversion fee: 1.85% on transaction value
Interest rate on purchases (if not repaid): 16.90% p.a.
Interest rate on cash advanced: 22.95% p.a. 
Interest free period: Up to 55 interest free days
Minimum repayment: $10 or 5% (whichever is the greater)
Best Air New Zealand Airpoints Credit Card (Low Spender)
Card: Kiwibank Air New Zealand Low Fee Mastercard
Annual fee: $25
Earn rate: $160 spent = 1 Airpoint
International ATM withdrawal fee: $6
Overseas currency conversion fee: 1.85% on transaction value
Interest rate on purchases (if not repaid): 16.90% p.a.
Interest rate on cash advanced: 22.95% p.a. 
Interest free period: Up to 44 interest free days
Best Air New Zealand Airpoints Credit Card (High Spender)
Card: Kiwibank Air New Zealand Platinum Mastercard
Annual fee: $150
Earn rate: $75 spent = 1 Airpoint
International ATM withdrawal fee: $6
Overseas currency conversion fee: 1.85% on transaction value
Interest rate on purchases (if not repaid): 20.95% p.a.
Interest rate on cash advanced: 22.95% p.a. 
Interest free period: Up to 44 interest free days

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