Are Visa and MasterCard on the Right Track?

By Arend, Mark | ABA Banking Journal, September 1993 | Go to article overview

Are Visa and MasterCard on the Right Track?


Arend, Mark, ABA Banking Journal


According to Visa U.S.A., debit cards are now "check cards." According to MasterCard International, home banking is now "remote banking." Such changes are more than mere semantics. They are part of emerging strategies that the bank card associations are undertaking to boost transaction volume and broaden their members' ability to offer transaction services.

While that may sound like business as usual, some card industry participants, including some bankers, are troubled by strategies the associations are pursuing--and a few they are not pursuing--at a time when card profits are sliding and the future of banks' role in the payments system grows cloudy.

"Bank card programs across the country are getting less and less profitable, and that's the major issue of the 1990s," says Jim Hendershot, CEO of the credit card unit of U.S. Bancorp, Portland, Ore. "This is not going to be a 3% after-tax ROA business anymore. Soon credit cards will be like any other form of consumer lending, so we're going to have to watch our costs and our risk exposure."

Visa and MasterCard are presenting their initiatives to the industry in increasingly diplomatic terms as some member banks attempt to do themselves what the card associations are doing.

HOME-BANKING STRATEGIES.

Home banking is a good example of the fine line the card associations now walk. On April 27, Visa joined forces with Intuit, Inc. (Menlo Park, Calif.), a personal financial management software company, to provide financial information services to homes and businesses through member institutions. Two days later, MasterCard unveiled its MasterBanking strategy for providing electronic financial services to consumers via bank members. The first manifestation of the plan was the formation of an alliance with Checkfree Corp. (Westerville, Ohio), an electronic payment-processing company, which last year processed over $3.6 billion in electronic payments.

"These programs provide a way for more banks to offer [remote] banking services," says Hendershot of U.S. Bancorp. "The associations are trying to corner the payments world, which increasingly is closer and closer to the point of sale, the home, or the place of business."

At the same time, several banks are readying their own home-banking offerings, which could in turn be marketed to other banks. Is there a potential conflict between banks and the associations?

"I don't have a problem with [the associations' remote-banking efforts], but some bankers I've spoken to have a problem with it," says William Randie, senior vicepresident at Huntington Bancshares, Columbus, Ohio. "The entire payments system in this country is in a bit of a turmoil, and the critical issue here is to figure out where it's going."

Adds Randie: "The card associations say that if they don't step in and do the job, a nonbank entity will, and that may be true. They're protecting the banks, or maybe just their turf," he continues. "It's complicated, especially because the card associations are bringing more and more nonbanks into the payment arena."

Huntington is one of several banks preparing to launch a screentelephone product in the near future.

Meanwhile, Banc One Corp. is test marketing a screen-phone system called ScanForte. A service of U.S. Order, Herndon, Va., ScanFone lets consumers electronically pay bills, execute noncash automated teller machine transactions, and order merchandise from catalogues, retail stores, and food outlets. U.S. Order and Banc One also have agreed to study the merits of establishing a new national electronic bill payment system capable of processing large volumes of electronic transactions.

The joint venture was announced in April. Craig Kelly, a Banc One senior vice-president, said at the time: "We believe that this is a logical transformation that can take place over the next ten foears and feel that it is important for the banking industry to take the leadership and control position t o develop the system. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • A full archive of books and articles related to this one
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Are Visa and MasterCard on the Right Track?
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

    Already a member? Log in now.