SunTrust Banks Inc. carefully weighed the Visa purchasing card program against MasterCard's competing program before announcing last week that it was going with Visa.

Visa got the nod after SunTrust concluded that both bankowned brands stacked up well against American Express Co.'s offering.

"It's like buying a pair of shoes," said William J. Moore, president and chief executive officer of SunTrust's Credit card subsidiary in Orlando. "You have to pick the right color and the pair that fits."

The hard decision reflects a recent and significant change in bank card managers' thinking.

Change in the Bylaws

For most of the last two decades, issuers routinely went dual - choosing both Visa and MasterCard as if one were the left shoe and the other the right.

But Visa changed its bylaws to prohibit duality in debit and commercial prodUCts, in effect forcing issuers to select one best-fitting shoe.

While Visa defeated MasterCard at SunTrust, Mr. Moore doesn't want MasterCard to go away. He wants freedom of choice, because otherwise "you become a victim of one issuer."

The debate on single as opposed to dual issuance has had a similar effect on other card executives. Even those who supported Visa's bylaw change find comfort in having two associations.

"It's an open issue," said William L. Glascock, senior vice president of commercial card products with NationsBank Corp. "What's the right way to go - to have duality or nonduality? I think there's the case to be made on both positions."

Public Debate

MasterCard certainly wants to keep the debate alive. Daniel T. Murray, MasterCard's senior vice president and general manager of credit products, took the stage last week with Richard H. Hagadorn, a Visa senior vice president, to do just that during a corporate card conference in Chicago.

It was the first chance both sides had to air their views in a public forum since the Visa U.S.A. board formally adopted the antiduality commercial-card bylaw in February.

According to the revised provision, Visa members -- in effect, all U.S. bank card issuers - must make independent brand decisions for each commercial market segment they serve. The members have until March 1, 1996, to make a brand commitment at the-holding company level.

Optional Conversion

After that, new issuers will have one year from the time they begin issuing commercial products to make their brand commitments. Conversion of existing business from another brand is not mandatory.

"We believe this issue is bigger than just limiting brand options on the credit products," Mr. Murray said. "In our view, a move toward nonduality challenges the traditional role of the associations."

"In a dual market you insist on as much conformity as you can get," Mr. Hagadorn said. "The fact is, duality encourages sameness. That's why nonduality in the commercial market is a vote for differentiation."

Naturally, this is a sticking point for MasterCard. "Brand positioning is the most basic differentiation," argued Mr. Murray, who maintained that hanks and their customers deserve choices, not mandates.

Competitive Edge

"We believe that brand choice is our members' right," Mr. Murray said. "Two strong, differentiated brands provide them with a significant competitive advantage."

The debate is flaring at a time when neither MasterCard, Visa, nor American Express can claim to be dominant in the largest of the commercial card segments the procurement market, said to represent a potential $400 billion of annual spending for small-ticket purchases by corporate employees.

All three contenders have recently upgraded or introduced card-based procurement programs, saying they can reduce corporate administrative costs by as much as 50% on transactions typically for stationery, computers, and other office supplies.

Interchange Fees Raised

Last year, the bank card associations enticed issuers to get into the purchasing game by increasing the interchange fee the hanks receive for each transaction, and waiving service charges.

So far, Visa said eight issuers have chosen its procurement program: SunTrust, U.S. Bank of Oregon, Chase Manhattan Corp., First Bank System Inc., CoreStates Financial Corp., Prudential Bank and Trust Co., Citicorp, and one other that refuses to be name publicly.

Citicorp also issues MasterCard's purchasing card, as does Norwest Card Services, Nationsbank, Mellon Bank Corp., and First Chicago Corp.

Visa said it has 150,000 purchasing cards in force, serving some 200 companies. MasterCard's has an estimated 20,000 cards serving around 75 companies.

Amex's Procmrement Card

Meanwhile, American Express has quietly built a foundation for its procurement program. American Express said it has signed up 128 Fortune 500 companies, and expects to reach 200 by yearend. It does not disclose the number of cards.

"The reality is the two [associations] spend more time watching each other than watching American Express," said Brian J. O'Hare, president of Norwest Card Services.

Eliminating duality has sharpened Visa's focus, Mr. Hagadorn said, which will help in dealing with what he views as an unforgiving corporate environment. "We're trying to convince the corporate world that our members have a legitimate, credible product in this marketplace that can serve as a watershed reengineering tool."

Distinct Personalities

Visa's board recognized the procurement market as new and untapped, allocating an initial $40 million investment. "Reasonable people tend to protect their investment from any competing brand," Mr. Hagadorn said.

"Over time, duality has encouraged MasterCard and Visa to develop very distinct brand personalities and spearhead different but meaningful initiatives in the marketplace," Mr. Murray said.

"Each association should strive to earn its members' support on the strength of its products and not by forcing the member into a single brand choice," Mr. Murray added.

"Once people have some exposure to duality in a product," Mr. O'Hare said, speaking of the consumer card market, "you can't roll back and say you can't do it" in other areas.

Mr. Hagadorn objects to the implication that Visa is heading for a nonduality stance across the board. "That doesn't make any sense," he said. "Duality helped make Visa what it is today: No. 1 in the consumer card market."

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