MasterCard International is saying that for the first time in five years it may have narrowed its market-share gap with Visa U.S.A.

The New York-based bank card association estimated that, at the end of the third, quarter, growth of all its products in four key areas - gross dollar volume charged, outstandings, accounts, and cards issued - was greater than for its West Coast bank card rival.

In an internal memorandum, the card association said the quarter was the first since 1987 in which it outpaced Visa in outstandings and cards. But it also cautioned that the results are based on preliminary numbers that could be revised when Visa formally calculates its growth data.

Rivalry Minimized

Richard Woods, MasterCard's chief spokesman, tried to play down the head-to-head comparisons that his organization made internally.

It is "in the interest of the industry to have two strong brands," he said, noting that the real enemies of the bank card groups are American Express' card complex and Dean Witter Financial Service's Discover cards.

Among all U.S. general-purpose cards, MasterCard's share of cards outstanding was estimated to have risen 80 basis points, to 31.6%, while Visa gained 20 basis points, to 45.9%, according to MasterCard. More significant, according to Mr. Woods, is American Express' estimated slippage, to 8.4% from 9.1%, and Discover's decline to 13.4%, from 13.6%.

If Mr. Woods was careful to stress the common interests of MasterCard and Visa, his counterpart at Visa was just as quick to blast MasterCard's claims.

AT&T Connection Cited

"Any growth that MasterCard had in the third quarter, you could spell AT&T," said the Visa spokesman, David Brancoli. He was referring to the popular Universal MasterCard sponsored by American Telephone and Telegraph Co.

Unlike Visa, MasterCard has been putting out a welcome mat to nonbank issuers, including AT&T, General Motors, and General Electric. Paul Khan, chief executive of AT&T's card unit, has even joined the board of MasterCard International.

"MasterCard has chosen a divergent path," Mr. Brancoli said. "Their rules are more lax. They're catering to nonbanks. In the process, they're diverting millions of dollars from bank members. We're not willing to risk the franchise."

Both bank card groups are owned by their members, which are overwhelmingly banks.

The GM Factor

Mr. Brancoli's comments came on the heels of General Motor's announcement last week that, in just two months of existence, 2 million GM-sponsored MasterCards had been issued and $500 million in card balances accumulated. The GM numbers were not reflected in the third-quarter statistics compiled by MasterCard.

The GM announcement was greeted with alarm in some banking circles. GM is offering rebates on its trucks and cars, based on amounts charged to its cards, and some bankers say they can't compete with that kind of incentive. Indeed, in the early returns, GM cardholders we charging more on their cards - average purchases of $112 - than the industry norm of $58 per purchase.

"I only sell credit cards," said Denny D. Dumler, senior vice president of Rocky Mountain Bancard System Inc. "I have to be consistent and long-term. Other nonfinancials don't have to do that."

MasterCard's Mr. Woods, however, argued that nothing prevents traditional issuers from participating in product-rebate programs through cobranding programs with retailers and other groups.

Cobranding "increases the . . . the attractiveness of the product," he said.

In its "flash report" at quarter's end, MasterCard said its share of the bank card market versus Visa's for all credit products was 40.3% to 61% in terms of accounts, 40.8% to 59.2% in terms of cards, and 40.1% to 49.9% in terms of outstandings. That translated to 6.5% growth versus Visa's 3.1% in accounts, 4.2% to 2.9% in cards, and 7.3% to 6.2% in outstandings.

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