Long time MasterCard partner and major debit and credit card issuer USAA announced it is switching brands to Visa:
USAA, one of the nation’s largest issuers of debit cards and credit cards, is switching its portfolio to Visa Inc., marking a blow for MasterCard Inc., which processed USAA transactions on its network for roughly 30 years.
The move is the latest in a continuing scramble of large portfolios hotly sought-after by payment networks Visa, MasterCard and American Express Co. It is relatively rare, however, for a card issuer, such as USAA, to switch network affiliations after such a long relationship.
Downplaying its impact, MasterCard said the customer loss will have minimal impact to their financial results:
“While we don’t like losing anything, this is part of our business and we factor this into how we work,” the Purchase, N.Y.-based payments network said. It added that as it pursued the business it “reached a point where the economics did not make sense.” It will continue providing certain processing and other services for USAA.
While MasterCard and other payment networks have diversified their capabilities, cushioning the impact that any single customer may have to their financial health, it is bound to be a topic of discussion when third quarter results are announced on Thursday October 26, 2015.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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