After years of marketing its Diners Club network in North America, Citigroup Inc. has officially thrown in the towel and finalized a deal to carry Diners Club transactions on MasterCard International's larger network.
The deal covers U.S. and Canadian Diners Club cards and will go into effect in November with the first new Canadian cards. The U.S. version of the cards for new corporate cardholders will come by yearend. Officials would not say when existing U.S. cardholders will get their new Diners Club cards.
The cards will be redesigned to carry a MasterCard hologram and brand mark on the front in addition to the Diners Club name and logo. According to a Citigroup spokeswoman, merchants will process sales as MasterCard transactions and pay the standard MasterCard fee. Transactions on the Diners Club network were typically more expensive.
Citi and MasterCard announced a tentative deal in April; the final details were released Monday.
The Citi spokeswoman said the international Diners Club network will stay in place. Only the North American network will be replaced by MasterCard's.
Even the Diners Club cards issued outside North America will carry a MasterCard brand on the back. When those cards are used in North America they will operate as MasterCard products.
Merchant reach was probably part of the reason for the switch. Diners Club has only 8 million merchants worldwide, one-third of what MasterCard has. Citi does not disclose the number of Diners Club cards it issues.
Though the MasterCard agreement seems to shut the door on a Citigroup-run U.S. payments network, the alliance could help put the high-end card in closer competition with American Express Co.
In the press release, Peter Knitzer, the executive vice president of Citi Cards, said the alliance would combine "Diners Club's world-class products and services with MasterCard's acceptance virtually everywhere in the world.
"An outstanding suite of benefits, combined with MasterCard's unsurpassed acceptance will make Diners Club an even more valuable tool for individuals and companies," Mr. Knitzer said.
Diners Club has promoted its card to frequent travelers, many of whom also carry American Express cards.
Earlier this year Citi obtained regulatory approval to market its Diners Club loyalty program to other businesses.
