Bank of America Could Start Own Payment Network

Bank

of America Could Start Own Payment Network

Bank of America could join the ranks of Visa, MasterCard, Discover

and American Express as a credit card payment network instead

of just a card issuer, according to several comments by Bank

of America personnel. Bank of America CEO Kenneth Lewis told

the Wall Street Journal in an interview Wednesday that ditching

MasterCard and Visa would help in branding, as the cards would

no longer have a MasterCard or Visa logo, but that any such

move was at least a year away.

The

acquisition of MBNA made Bank of America the issuer of around

42 million credit card accounts. Creating a payment network

instead of using Visa or MasterCard's could save the company

millions of dollars each year. Banks that issue cards on the

Visa and MasterCard networks have to pay a small percentage

of each purchase to those networks, and Bank of America's size

means that in aggregate it is paying more than most.

If

Bank of America does create its own processing network, it could

be thought of as similar to those of American Express and Discover,

companies that both issue credit cards and process them as well.

MasterCard and Visa, by comparison, are associations of banks

that do not issue credit cards directly.

Published 04/27/06 (Modified 05/07/12)