Data Let Visa, MasterCard Boast Gains
Kuykendall, Lavonne, American Banker
Which of the following is true? a) MasterCard is gaining market share on Visa; b) Visa is gaining market share on MasterCard; or c) It depends how you're measuring things.
The answer appears to be d) all of the above, but the question has been on the front burner ever since a report published in November predicted that longtime underdog MasterCard International would overtake mighty Visa U.S.A. in the number of credit cards in circulation in the United States next year, outstrip Visa in loans outstanding by 2004, and make further strides by 2010.
MasterCard happily called the data -- published in The Nilson Report, a biweekly industry newsletter -- a validation of its "longtime strategy." But Visa pretty much shrugged at its rival's gains, which came in a category -- cards in force -- that is not closely linked to profits. Also, the forecasts were followed by a notable "however" -- that Visa will remain larger in transaction and dollar volume, where the money is made.
Visa said it concerns itself most with the categories in which it continues to hold sway: volume, commercial cards, and debit cards (a particularly hot product).
"Our strategy is not aimed at the number of cards," said Tony N. McEwen, executive vice president of product management at Visa. "We work on usage, to get more volume on the cards."
The Nilson Report article "focuses on a very specific part of the business, and we focus on a much larger objective in the marketplace," Mr. McEwen said. MasterCard "has been successful in getting some good, strong relationships with Citibank and Chase, but to project for 10 years is problematic."
Ruth Ann Marshall, president of MasterCard North America, said MasterCard has picked up momentum because of its flexibility in catering to individual banks. She said her company's growth trend has been building for several years, and she would not discuss whether the gains were linked specifically to Citigroup Inc.'s 1999 decision to resign from Visa's board and start pumping out MasterCards. …