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)
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