It was one of the big blows dealt on Mastercard Inc (NYSE:MA) by Visa Inc (NYSE:V) by weaning away almost three decades client, USAA, which is one of the biggest issuers of debit, as well as credit cards.
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The move is the latest in a continuing scramble of large portfolios that are hotly sought-after by Visa, MasterCard and American Express Co. among issuers and networks. The competition has intensified in recent years, as retailers have increased leverage over card issuers and aim to get better rewards for customers. The financial institution, which serves members of the military and their families with a variety of financial services, also mentions that the shift to Visa “provides [it] the opportunity to offer more benefits, including the elimination of foreign transaction fees for all USAA Visa credit cards” beginning next year.
It will handle changing most customers cards during 2016, reports CNBC.
“This news doesn’t affect our outlook for revenue or profits”, A MasterCard spokesman told Bloomberg about USAA switching to Visa. Meanwhile, USAA is Mastercard’s largest debit-card issuer, with $26 billion of purchases made on its cards in 2014.
Mastercard confirmed the news with WSJ, noting that “it reached a point where the economics did not make sense” and “this is part of our business and we factor this into how we work”.
Economic details about the new partnership have not been released.
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The USAA is the 10th-largest credit-card issuer, and had $17.53 billion in outstanding loans as of June 30, according to the Wall Street Journal.
