Will retailers like Saks Fifth Avenue and Bloomingdale|s start handing MasterCard and Visa cards to their customers? That's the latest buzz - and it could cause the biggest shift in credit card market share since AT & T jumped into the business two years ago.

Most "private label" cards are used at a specific merchant. But if a retailer issues ins plastic through a Visa or MasterCard member bank, the cards could be used just about everywhere.

The Race Would Be On

That could be good news for banks that grab the business - and bad news for those who fail to sign up a retail partner.

Retailers had about 466.5 million private-label cards in their customers' hands at the end of 1990, according to the Nilson Report, a card industry newsletter. By comparison, MasterCard and Visa combined had 216.5 million cards outstanding.

The notion of converting private-label plastic to general-purpose cards has been around for years, but new interest has been generated in part by a study released recently by SMR Research Corp., a consulting firm in Budd Lake, N.J.

A Major Alteration

If bankers succeed in persuading big retailers to transform their cards, the impact on the industry would be enormous, the study found.

"There are many more retail cards outstanding than bank cards," said Stuart Feldstein, SMR's president. "It could cause major market-share shifts."

Only a handful of stores today stamp a MasterCard or Visa logo on their cards. They include U.S. Shoe Corp.'s Casual Corner, Ames Department Stores, and Bloomingdale's by Mail, the catalogue arm of the tony retailer. But experts believe many others will follow.

|Co-Branding' Adopted

One reason is that MasterCard and Visa both recently adopted rules that promote "co-branding." For example, banks can now issue cards with two account numbers - one for the bank and one for its retail partner. That allows stores to continue to do their own billing offer cardholders special discounts and shopping incentives.

Another reason is that retailers in today's economic climate may be more willing to embrace a bank partner. Stores want to enhance their cards' value while reducing the costs and risks associated with card payments.

"The problem facing department stores today is that they need to make sure people are carrying their cards," said Robert Creekmore, a former American Express Co. executive who now runs a consulting firm in Fort Lauderdale.

"I know that [banks have held] conversations with retailers - very intense conversations," Mr. Creekmore said.

Resistance Felt

But some retailers aren't biting.

"We looked at it, and we obviously haven't decided to do it," said Ralph Spurgin, president and chief executive officer of Limited Credit Services, the card arm of the Limited Inc.

"From my observations, the ones that have done it can't afford ... to do their own proprietary cards," Mr. Spurgin said.

He also said he isn't sure that consumers need another all-purpose card.

"While somebody may associate themselves with the Sierra Club," he said, referring to the successful affinity-card trend, "there isn't the same association with a store."

Many cash-strapped retailers -most notably, Macy's - have already sold their credit card receivables to private-label processors like GE Capital Corp., Beneficial Corp., and Citicorp.

There has been speculation the GE Capital, the largest of the processors, is working with some of its private-label clients to convert their plastic to bank cards issued by Monogram Bank. Monogram, a GE Capital unit, is the nation's 15th-largest issuer of bank cards.

"We are somewhat bewildered that the industry hasn't put together many of these deals already," said Donald J. Auriemma, a credit card consultant in Garden City, N.Y. "The idea is golden."

A spokeswoman for GE Capital would not comment.

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