Chase Manhattan Corp. dropped its Visa check program to issue MasterCard International's competing debit brand.
Chemical Bank, the larger bank in the recent merger with Chase, had previously planned to issue MasterCard's product but had not yet begun to do so.
"We couldn't have both products," said Chase spokeswoman Ellen Stuart. Chemical's longstanding relationship with MasterCard and the latter's global branding strategy were deciding factors, she said.
Though Chase has been issuing Visa check cards and historically has been closely allied with Visa, it will replace those cards by 1997.
An initial 800,000 Chemical customers will receive the cards beginning this month. "We thought it was in the best interest of our customers to maintain the schedule we had planned" before the merger, said Ms. Stuart, originally a Chemical employee. "We didn't want our customers to wait."
The merged entity will issue close to two million off-line debit cards bearing the Cirrus, Maestro, and MasterCard logos. MasterMoney, the name of MasterCard's debit program, will not appear.
Chase customers will get the enhanced automated teller machine cards after branch consolidations, by the first quarter of 1997.
David Robertson, president of The Nilson Report, an Oxnard, Calif.-based newsletter, said the move comes as no surprise. MasterCard benefited from the fact that its loyalists at Chemical dominate the executive ranks, he said.
He added, "MasterCard is wielding the price card because they are substantially behind Visa in the debit arena." MasterCard is trying to woo potential issuers by offering an interchange rate on transactions 20 basis points higher than Visa's, he said.
"There are many components to member profitability in this product - interchange is just one," said Sheila Scarry, senior vice president of MasterCard, based in Purchase, N.Y.
The Nilson Report said Visa check cards led MasterMoney by 31.8 million to 7.5 million at yearend 1995.
