BankAmerica Corp., the nation's second largest bank holding company and a Visa board member, will issue MasterCard purchasing cards to corporate customers.
Bank of America Merchant Services will manage the program, which was unveiled on Thursday and will take effect in September.
The San Francisco-based bank will evaluate the program after a year and consider issuing a Visa purchasing card, said Sharif Bayyari, senior vice president and head of the merchant services group. "We'll choose the product our customers want."
May Issue MasterCard and Visa
If Bank of America issues both products at once, it will join Citicorp, the nation's largest bank-holding company, in issuing MasterCard and Visa purchasing cards despite a Visa bylaw that prohibits duality.
"Bank of America sets the proper tone for the level of importance for purchasing cards, in general," said Steve L. Abrams, vice president for commercial card products at MasterCard.
"We're very pleased," Mr. Abrams added. "We feel over time perhaps Visa will change its view [on duality]."
In February, the Visa U.S.A. board adopted a bylaw that stipulates Visa members choose one brand in each market commercial segment they serve by March 1996.
One Year to Make Commitments
After that, new issuers will have one year from the time they begin issuing commercial products, such as corporate cards and purchasing cards, to make their brand commitments.
In the meantime, MasterCard said six other issuers have signed on to its purchasing program with announcements to follow.
Purchasing cards streamline the procurement process in large corporations for low dollar transactions. Cards account for a meager 1% of the total $400 billionsmall purchase market.
With many of the nation's top corporations as clients and with the largest bank-owned merchant business, Bank of America is well positioned to capture a number of transactions, Mr. Bayyari said.
Suppliers May Be Added
As a merchant acquirer, the bank can add suppliers that companies use to accept bank cards for purchases. A majority of suppliers don't.
Suppliers are the key to purchasing programs, Mr. Abrams said.
MasterCard's system allows data -- such as sales tax paid, vendor classification, duty amount, and other line-item details -- to be captured at the point of sale and from the back office of the wholesaler on personal computer or by telephone.
Such information allows the corporations to meet financial-reporting requirements.
"We control the flow of dollars as well as the flow of data," he said. In effect, the bank's system emulates other closed-loop systems, such as American Express Co.
One reason Bank of America chose MasterCard's program, Mr. Bayyari said, is it offered flexible billing and enhanced data capture superior to Visa's.
