Sears, Roebuck and Co. has hit another roadblock in its quest to join a nationwide bank card association.
MasterCard International on Monday said it rejected the Chicago retailer's application to issue MasterCards through Mountainwest Financial, a Utah thrift it bought in 1990.
Rejected by Visa
Mountainwest had previously been rejected by MasterCard's rival, Visa U.S.A. Both card associations have bylaws prohibiting direct competitors from becoming members.
"Discover wants to both compete with and participate in the MasterCard franchise," Peter S.P. Dimsey, president of MasterCard's U.S. region said in a prepared statement. "They can't have it both ways."
Sears in considered a direct competitor because it issues the Discover credit card. Sears has sought membership in a bank card group to gain access to millions of merchants who do not accept Discover.
The retailer continues to press a federal antitrust suit against Visa, aimed at forcing the card group to open its doors. A trial is scheduled for September in Salt Lake City.
Applied in March
Sears applied for MasterCard membership in March -- one month after the retailer lost a bid in federal court to gain access to the Visa system without arguing a protracted antitrust case.
A spokeswoman for Sears' Dean Witter Financial Services Group would not say if similar legal action would be taken against MasterCard.
"We are confident we will prevail against Visa," she added.
No-Fee Program on Hold
Because of its legal battle with Visa U.S.A., Sears has been forced to put on hold its plan to offer no-fee "Prime Option" Visa cards to at least eight million consumers nationwide.
Sears had hoped that last December's Federal Deposit Insurance Corp. Improvement Act would provide it strong ammunition against Visa.
The law included a provision sponsored by Sen. Jake Garn, R-Utah, that requires all companies and membership associations to honor their contracts with thrifts sold by the Resolution Trust Corp.
Sears purchased Mountain-west, a Visa member, from the government agency.
The Dean Witter unit quickly cited the 1991 law in court, but U.S. District Judge Dee V. Benson ruled that the banking law does not give a private entity the right to enforce the provision.
His decision forced Sears to argue its case against Visa under antitrust law.