Citigroup Plans to Switch Credit Card Business to MasterCard
NEW YORK (AP) -- Citigroup, the nation's largest financial services company, is shaking up the credit card industry with plans to give its new credit card business to MasterCard International instead of Visa USA.
Citigroup's chairman, John Reed, and its head of consumer operations, Bob Lipp, resigned from Visa's board of directors on Tuesday, following weeks of debate over Reed's drive to banish the Visa logo to the back of the credit card in order to heighten the profile of the "Citi" brand.
MasterCard, which has seen its share of the credit card market decline for more than 20 years, offered to give Citigroup a discount in its dues, and agreed to move the MasterCard symbol to the back of the card, said David Robertson, president of The Nilson Report, an industry newsletter. Citigroup "got a sweetheart deal from MasterCard," said Robertson. "That's money that flows right to the bottom line." Last year Citigroup paid Visa dues totaling between $75 million and $100 million, according to an industry source. New York-based Citigroup would only confirm that it has resigned from the Visa board and made no comment about its future with MasterCard. A spokeswoman for MasterCard also would not comment. Under the deal, Citigroup would stop issuing Visa cards and any new credit cards would carry only the MasterCard logo. As existing Visa cards expire over the next several years, they would be replaced with MasterCards. Citigroup is already a major issuer of MasterCard credit cards, which make up 53 percent of the company's cards. But the Visa cards are more heavily used, accounting for 55 percent of Citigroup's credit card balances. …