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.
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