After years of struggling to find a niche for its person-to-person Internet payments business, Citigroup Inc. has figured out which customers it does not want to attract: Visa cardholders.
On Aug. 17, c2it, Citibank's online payments site, stopped accepting any type of Visa card. Customers can still fund the money transfer from a checking account or with any MasterCard, which is Citi's exclusive debit card and its dedicated credit card brand. Citi notified its customers of the change by e-mail.
A Citi spokeswoman did not say why the change was made. A Visa spokeswoman called the slight unfortunate but said that c2it represented a minuscule portion of Visa U.S.A.'s daily volume. The fraction she gave would make c2it's share less than $13,600 a day on the basis of Visa U.S.A.'s first-quarter volume of $245.4 billion. c2it currently charges a 2% transfer fee for domestic transactions, which could mean it is forgoing as much as $275 a day in fees by shunning Visa.
Since its 2000 launch, c2it has failed to take many customers away from the Internet payments leader PayPal Inc., which the online auctioneer eBay Inc. bought in October. c2it features international money transfers for $10. It has tried several pricing structures, including free domestic money transfers.
An analyst said that losing Visa cards would probably hurt its already low estimated volume by eliminating a number of potential customers. But that might not amount to a lot of business.
"It seems clear to me that PayPal has already won this market," said Chris Britt, vice president and practice leader in banking for the comScore Networks consulting firm in Reston, Va. "If you look at any given month, the number of unique visitors that go to PayPal is 60 times larger than those who visit the c2it Web site."
Last month 200,438 Internet surfers visited the c2it site, against 12.3 million for PayPal, according to comScore data. Internet visits do not necessarily mean a transaction was completed, Mr. Britt said.
eBay bought PayPal after the payment service proved more popular than one it had started with Wells Fargo & Co.
