In a serious blow to Visa USA, Citigroup, Inc., may give all their new credit card business to MasterCard International. Furthermore, as Visa cards expire, they may be branded MasterCard cards, with the exception of Citigroup cards that are contractually bound to Visa. The switch follows resignations of Visa board members John Reed (Citigroup's chairperson) and Bob Lipp (Citigroup's head of consumer operations).
Over the past few weeks, there has been reported discord between Citigroup and Visa over placement of the Visa logo and membership dues. (Last year Citigroup paid Visa a reported $100 million in dues.) Citicorp wanted to move the Visa logo to the back of the cards, Visa disagreed. Now MasterCard, eyeing the growing tension, may be moving in and offering placement of the MasterCard logo on the back of the cards, as wells as reduced membership dues.
MasterCard will not comment on the suspected deal and Citigroup would only confirm the resignations. However, a Visa spokesman said that his company has "broad support...that our brand should be managed in a way that ensures its long-term vibrancy even as some banks pursue their own brand identities."
