MasterCard Inc. may be set to expand its market share in Canada with some help from Wal-Mart Stores Inc., according to Mercator Advisory Group.
The introduction this year of two notable rewards-based MasterCard credit cards and the fact that Canada's banks recently gained the ability to offer customers cards from both MasterCard and Visa Inc., could alter Canada's credit card market, said Patricia McGinnis, a principal analyst at Mercator, of Maynard, Mass.
"Card-network market share has not budged much in Canada in several years. But with Wal-Mart entering the picture with a new MasterCard product, we could begin to see shifts in some consumers' wallets," McGinnis said.
In June Wal-Mart's newly licensed Wal-Mart Canada Bank rolled out the Walmart Rewards MasterCard, which likely could lure middle- and lower-income consumers and drive more credit card accounts to MasterCard, Canada's No. 2 credit card network, McGinnis said.
The first major move into dual-brand issuing by a large Canadian bank occurred in June, when Canadian Imperial Bank of Commerce purchased Citigroup Inc.'s Canadian MasterCard credit card portfolio for $1.97 billion. Royal Bank of Canada, a Visa issuer, branched into issuing the MasterCard brand with the March launch of the cobranded WestJet RBC MasterCard in association with WestJet Airlines Ltd.
Visa, Canada's longtime market leader, still claims a 61% share of the nation's credit card market by purchase volume, accounting for approximately $164 billion of $268 billion in total credit card spending last year, while MasterCard claims a 31% share with $82 billion and American Express Co. has about 8% share with $22 billion, according to Mercator.
The Walmart Bank MasterCard enables cardholders to earn rewards worth 1% of their total purchases and an extra 0.25% on Walmart purchases. Cardholders may redeem rewards only as cash for new purchases at Walmart Canada stores.
"Heavy Walmart shoppers will be most likely to adopt the new MasterCard, although the rewards program alone probably will not drive new business to Walmart," McGinnis said.
