Shadowing Practice: How Visa and MasterCard make their money - Learn English Speaking with Video
Creating lesson...
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How do Visa and MasterCard make their money?
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Millions of people today own plastic cards and use them to purchase almost everything from household appliances to plane tickets.
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Most Americans today have at least one credit and debit card.
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A majority own a lot of them, hoping to take advantage of all the rewards, cashback opportunities, and promotional benefits that issuers have to offer.
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Issuing of cards can be done by banks or a financial service company.
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However, the card transactions have to be processed through a particular system.
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A payment system is basically a process that is intended to settle financial transactions through both transfers and monetary values.
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In simpler terms, it's an operational network that links payment providers with bank accounts.
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Four major companies influence the electronic payment industry.
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These are Visa, MasterCard, American Express, and Discover, which are responsible for taking care of the majority of the world's card payments.
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Visa and Mastercard are said to be the largest
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and most popular payment systems globally
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and lately I've been wondering how they make their money so I decided to do some research.
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Mastercard is an American multinational financial services corporation with its headquarters in New York.
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Before its initial public offering, Mastercard Worldwide was a cooperative owned by the more than 25 ,000 financial institutions that issue its branded cards.
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MasterCard was created as an association of several regional bank card
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associations in response to the Bank AmeriCard issued by Bank of America which later became the Visa Credit issued by Visa Inc.
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These companies do their best to connect and power an inclusive digital economy that benefits everyone everywhere by making transactions safe,
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simple, smart, and accessible.
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Their innovations and solutions enable individuals,
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financial institutions, governments and businesses to realize their greatest potential through secure data and networks, partnership and passion.
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There's barely any difference between Visa and MasterCard when it comes to where you can use them.
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Both Visa and MasterCard can be used almost anywhere around the world that accepts card payments either in stores or online.
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It's hard to find a retailer that would accept one
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but not the other so it isn't really a case of visa versus mastercard
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when it comes to where they're accepted either would be fine however this isn't the same for american express
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it is also a payment network but it costs more for the retailer to process your payment
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that means some vendors don't accept american express because it costs them more
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so let's take a look at how these companies operate they both have huge
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if not enormous payment networks and also act as mediators.
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As much as they are financial service corporations, it doesn't mean they send or receive funds from their own accounts or resources.
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The companies are neither involved with extending credit nor issuing cards, meaning that all Visa and MasterCard transactions are issued through some form of co -branded relationships.
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They partner up with financial institutions like banks and credit unions, which issue card payments for individuals and businesses,
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either directly or through collaboration with hotels, airlines, or retail brands.
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They offer a wide array of products which is inclusive of credit, debit and prepaid card options.
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These banks and other financial institutions who issue these cards set the payment cards terms and conditions, inclusive of fees, rewards and other features.
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The issuing bank is in charge of underwriting, interest rate structuring and the full development of reward programs
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and this is for credit cards card issuers also offer other perks
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and benefits such as car rental insurance fraud and identity theft protection
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or even business purchase discounts although the variation in interest rates credit limits
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and reward programs are overseen by the issuing financial institution MasterCard
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and Visa compete for the co -branded association
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and also participate in the drafting of the card terms
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and conditions MasterCard and Visa receive about 0 .1 % of any individual transaction passed through their brands.
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You can refer to this as some sort of exchange, charged to the merchant, or just a transaction fee.
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You might think that this is quite little, but if you analyze this further, you'll find that it's not as little.
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These companies conduct thousands of transactions on a daily basis, which brings them hundreds of billions of dollars annually.
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Experts say that such a company can bag up to $1 trillion a year.
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If you're not yet impressed, then think of it this way.
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The UK GDP for 2017 was $2 ,622 trillion.
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So, if you do the math, 1 trillion is approximately 4 % of the UK's GDP.
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There's a huge difference between Visa and MasterCard and American Express and Discover.
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Visa and MasterCard's main sources of revenue are the transaction fees which was established earlier.
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They also cover the cost of maintaining their networks, customer service, troubleshooting, covering AML and any fraudulent transaction costs and so on.
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The cost of transactions may differ based on the type of business, the type of card and of course the network brand.
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Usually Visa and MasterCard have lower fees as compared to their competitors.
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Visa and MasterCard are the only network payment processors that are involved in all the areas of the payment market.
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Working solely as network operators, these companies have a unique advantage but work differently.
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Taking a look at MasterCard's financials, we see that the company generated total revenue of $16 .9 billion in 2019, with a payment volume of $6 .5 billion.
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Some of its card products include consumer credit, consumer debit, prepaid cards, and commercial product business.
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MasterCard has a reportable business segment called Payment Solutions, which is divided according to geographics across the states and other countries.
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The company earns a chunk of its revenue from service and data processing fees, just like Visa.
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But the difference between the two is that MasterCard characterizes the fees differently.
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Its service fees are negotiated and calculated as a percentage of the worldwide dollar value.
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Date processing fees are called switching fees, which is a small fixed cost per transaction that's charged to the issuer.
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MasterCard is known for offering three card levels, and these are Base, World, and World Elite.
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MasterCard carries out transactions in more than 150 currencies across more than 210 countries and territories.
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Even though the company does not have a monopoly on the payment industry, majorly due to similar operators like Visa and also the emergence of new payment service providers,
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it is still largely successful globally.
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A majority of its success being owed to the company brand and the cache it holds.
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Mastercard sees having the upper hand over the up -and -coming payment systems with its ability to be a multi -rail network, covering domestic, cross -trader and card -based in account -to -account transactions.
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The company vows to continue to develop and strengthen each of these channels in the future.
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As for the traditional debit, credit, prepaid and commercial product, the company will continue to offer users and financial institutions a broader variety of options,
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both in references to the products themselves as well as in payment plans and systems.
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Although Mastercard is a major player in the global payment industry, it also experiences some crucial challenges.
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Among the greatest is government regulation.
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The company has gone through a number of antitrust suits over the years, and regulation frequently changes in a majority of the regions in which the company conducts business.
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It has to remain flexible and alert to ensure its business excels.
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Considering MasterCard's international and cross -border business, this is a significant component of its continued success.
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When it comes to Visa, it also reports a single segment, which is payment services
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but it occasionally divides its revenue into four smaller segments which generate the majority of the company's revenue.
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These sub -segments are service revenue, data processing revenue, international transaction revenue, and other revenue.
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Service revenue is attached to something called payment volume meaning
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that the more a product costs the more MasterCard or Visa earn although in small amounts.
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Data processing revenue refers to the fees collected based on the number of transactions made, rather than the value of each transaction.
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International transaction revenues are generated whenever a cardholder purchases goods in a country different from the card issuer's country of origin.
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Visa illustrates these sub -segments as components of net revenue, but they are reported gross of client incentives.
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The total revenue summed up from each segment is equivalent to
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a gross revenue close to $6 .4 billion for quarter three fiscal year.
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2020. Visa's net revenue of $4 .8 billion for the quarter is the figure obtained
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when client incentives are deducted from the gross revenue.
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Recently, Visa announced it will extend its global partnership with PayPal.
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The extension of this partnership will pave the way to the expansion of real -time access to funds for consumers
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and small businesses that are either sending or receiving cash using PayPal, Zoom, or Venmo.
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It will be able to expand PayPal's instant transfer services
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which leverages visa direct for real -time payments one strategy
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that a company can adapt to create growth is to improve its existing technology by extending product features
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and visa and mastercard have a long history of doing just
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so when they saw mobile which is now part of exxon introduce speedpass visa
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and mastercard started working with third party merchants on a host of smart chip technologies for contactless payment touch
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and go and pay with wave transactions.
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When they saw the addition of personal passwords, Visa and MasterCard both revealed a card with an embedded fingerprint scanner,
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a small square sitting at the top right hand corner that acts like a makeshift biometric reader.
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All these innovations were meant to better the performance of their existing offerings. In conclusion,
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both Visa and MasterCard seem to continuously revolutionize the electronic payment industry and don't appear to be slowing down anytime soon.
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I hope you enjoyed the video.
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Give it a thumbs up if you did and consider subscribing if you're new to the channel.
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With that said, have a great day you guys and I'll see you all in the next one.
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Why Practice Speaking with This Video?
This video is a goldmine for english speaking practice—it blends everyday financial topics with clear, conversational language, perfect for shadow speech exercises. Discussing how Visa and MasterCard make money introduces real-world context, helping you tackle IELTS speaking practice questions on business or technology. The speaker’s steady pace and logical flow make it easy to mimic, building confidence in explaining complex ideas. Plus, learning English with videos like this improves your ability to follow and respond to factual discussions, a key skill for both exams and daily life.
Grammar & Expressions in Context
Master practical structures from the video:
- "As much as they are financial service corporations, it doesn't mean..." – Use "as much as" to contrast expectations with reality, a useful tool for IELTS speaking.
- "These companies do their best to connect and power an inclusive digital economy..." – "Do their best to" + verb phrase is great for describing goals, common in both casual and formal speech.
- "You might think that this is quite little, but if you analyze this further..." – "You might think... but" helps counter assumptions, a skill for persuasive or explanatory speaking.
Common Pronunciation Traps
Watch out for these tricky words:
- Issuers – Pronounce "ih-syoo-ers" (not "ih-sherz") to avoid confusion with "issuers" (issuers of cards).
- Underwriting – Break it into "un-der-wry-ting" to master the stress on the second syllable.
- Multinational – Emphasize "mul-ti-NASH-uh-nul" to keep the flow natural.
Grammar in this video
The structures the speaker uses most, with the exact words from the video:
| Structure | In the video |
|---|---|
| Passive voice be + past participle — the focus is on what happens, not who does it | can be done · be processed · is intended |
| Relative clauses who / which + clause — extra information about a person or thing | Discover, which are · products which is · fees which was |
What is the Shadowing Technique?
Shadowing is a science-backed language learning technique originally developed for professional interpreter training and popularized by polyglot Dr. Alexander Arguelles. The method is simple but powerful: you listen to native English audio and immediately repeat it out loud — like a shadow following the speaker with just a 1–2 second delay. Unlike passive listening or grammar drills, shadowing forces your brain and mouth muscles to simultaneously process and reproduce real speech patterns. Research shows it significantly improves pronunciation accuracy, intonation, rhythm, connected speech, listening comprehension, and speaking fluency — making it one of the most effective methods for IELTS Speaking preparation and real-world English communication.