What is missing from Bank of America Corp.’s newest debit cards says much about what has changed in issuers’ branding relationships with payment networks.
The backs of the cards have the standard black magnetic stripe, but the familiar band of debit network company logos is absent.
Bank of America began issuing the cards in late 2004 to the customers acquired with its April purchase of FleetBoston Financial Corp. The Charlotte company’s logo is on the cards’ front and back and the Visa U.S.A. logo and hologram are on the front.
One reason behind the disappearance of the symbols for the traditional regional payment networks such as NYCE and Cirrus is “we wanted to free up real estate on the back of our card, and use that to provide additional customer information if needed,” said B of A spokeswoman Jackie Tilden.
Those logos had been there for years. That Visa’s is now the only mark on the card, however, does not mean all the transactions will flow down the VisaNet network.
Bank of America still has relationships “with a variety of networks,” Ms. Tilden said. “The logos are less critical, because customers expect acceptance everywhere. They no longer need to identify networks where they can use their cards.”
Ms. Tilden would not say whether B of A plans to take this approach when it issues other new types of cards or issues cards to new customers.
Bank of America has relationships with most of the large electronic funds transfer networks, including First Data Corp.’s Star, which processes automated teller machine transactions. Star had earlier handled B of A’s PIN payments, but B of A switched to Visa’s Interlink PIN debit network in 2001. In September, B of A moved some of its volume back to Star. In the past B of A’s debit cards have carried both networks’ logos.
When MasterCard International announced this month that it would be converting Washington Mutual Inc.’s debit portfolio from Visa to MasterCard cards, it said logos for the MasterCard PIN debit and ATM networks, Maestro and Cirrus, would not appear on the back of the cards. Having the MasterCard logo on the front would be enough, the company said, to show that the card could be used for ATM and PIN and signature debit transactions.
Last week MasterCard announced it was reevaluating its relationship with Pulse EFT Association, which was recently bought by a MasterCard rival, Morgan Stanley’s Discover Financial Services.
Joshua Peirez, a senior vice president and an associate general counsel for MasterCard, said that the Purchase, N.Y., company has yet to make a decision about the Pulse relationship; the EFT network’s logo has been on the back of MasterCard debit cards for years.
Tony Hayes, the managing director of Dove Consulting Inc.’s financial services practice, said the EFT networks’ success “in establishing near-universal acceptance at ATMs and at the point of sale may have diminished the relevance of their brands. It’s somewhat ironic.”
Eric Grover, a partner in the Intrepid Ventures payments consulting firm in Menlo Park, Calif., said he first noticed the B of A cards’ new look when he received one of the reissued Fleet debit cards. The NYCE and Cirrus logos, which had been on the back of his previous card, were absent. (The NYCE network is a unit of Metavante Corp., the technology subsidiary of the Milwaukee banking company Marshall & Ilsley Corp. Cirrus is MasterCard International’s ATM brand.)
Mr. Grover said that deleting the network marks is a sign that processing debit transactions is becoming a commodity business in which the “margins would be completely squeezed out.”
Stan Paur, the president and chief executive of Pulse, which is based in Houston, said influential big banks such as B of A and Citigroup Inc. may begin to emphasize their own brands and get rid of the network marks on the cards. They would retain the network relationships but could decide to exert more influence, he said.
Mr. Paur said that banks may agree to remain in a network but could make demands about the cards’ appearance. “If that’s the tradeoff to retain that institution, I think that most networks are going to accommodate these requests.”
Richard S. Jenkins, the senior vice president and corporate counsel for the EFT network Shazam Inc. of Johnston, Iowa, said that even if their brand identities are becoming less important, the different networks can charge different interchange rates, and a bank’s choice of debit network remains an important decision.
Networks often have priority routing rules that favor the issuers’ preferences, but merchants, through their processors, can have a say in where the transactions are routed, and that can affect the interchange rates the merchants must pay, Mr. Jenkins said.
He said the matter will eventually go to court. “At the end of the day this is going to be settled between the issuers and the merchants, and that day has not come yet.”
