MasterCard Inc., whose efforts to catch up to Visa Inc. in debit have suffered a series of setbacks, is hoping to win over issuers with a reward program that will be widely available and financed by merchants.

Today the Purchase, N.Y., company is set to unveil MasterCard Savings, which lets all U.S. debit and some prepaid cardholders earn rewards like coupons, discounts, and statement credits, regardless of the card's issuer.

The rewards are meant to supplement, not replace, issuers' debit rewards, MasterCard said.

"This is a program that is no cost to the issuers," Patricia Preston, MasterCard's senior vice president for U.S. debit product management and development, said Friday. "It will drive increased volume and usage on their cards. It will also be a powerful retention tool. … It provides what we feel is a very compelling reason for an issuer to want to issue a debit MasterCard."

Observers said the program's scale is unprecedented in debit. Jonathan Gagliano, the executive vice president of Affinity Solutions Inc., which designs merchant-funded reward programs, said he was not aware of another one that would be available to all debit cardholders and free for issuers.

"I don't think that exists today," he said. "If you're looking at Visa and MasterCard, does this give MasterCard an edge? Absolutely."

Tony Hayes, a partner at Marsh & McLennan Cos.' Oliver Wyman, said most off-the-shelf debit reward programs have yielded little benefit for issuers. A networkwide, merchant-funded program could make MasterCard more attractive to debit issuers, he said. "Networks with strong network rewards programs create … a customer-service barrier to changing networks."

Visa said Friday that it does not offer any reward programs that are debit-specific. Its Visa Extras program for debit and credit cards is issuer-funded. Visa Rewards Online does provide merchant-funded discounts to cardholders at no cost to the issuer, but the discounts are provided through issuers that participate in the program, not directly by Visa to all cardholders, the company said.

Last month MasterCard lost one of its top debit issuers when Royal Bank of Scotland Group PLC's Citizens Financial Group Inc. said it would switch to Visa. Recent banking transactions have raised the possibility of more defections. JPMorgan Chase & Co., which issues most of its debit cards on the Visa network, has taken over the banking operation of Washington Mutual Inc., MasterCard's top debit issuer. And Wells Fargo & Co. said Friday that it would buy Wachovia Corp. (which previously had a deal with Citigroup Inc.) The Citi deal had raised the possibility that Wachovia would switch its debit cards from Visa to MasterCard. Wells is a Visa issuer. According to PaymentsSource, Wells is currently the second-largest debit issuer, Wachovia is fifth, and Citi is eighth.

Next Jump Inc. helped develop the program and recruited more than 25,000 merchants to offer coupons, discounts, free shipping, or automatic statement credit to cardholders.

Cardholders must enroll online and can customize the types of rewards they want, but issuers cannot. Observers called the lack of issuer customization a weakness.

"By having a network work with the same retailers, those retailers will just be put in the program for bank A, B, C, D, whereas a successful program matches the retailer with the bank," said Mr. Gagliano, whose company developed a merchant-funded debit reward program for Discover Financial Services.

The MasterCard model could become onerous for the merchants, he said. "Trying to support a fully free, merchant-funded program … minimizes the cost customization, and it heavily weights the cost towards the retailer."

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