allegiance, the latest American Banker consumer survey shows. This banking juggernaut, with its collective one-two punch of MasterCard and Visa, has yet again extended its lead over American Express and Discover. And in the intramural contest, Visa has continued its recent pattern of looking just a bit stronger than MasterCard, even as both associations benefit from consistent growth in consumer transactions and card loans. The findings, from the September 1995 poll conducted for the newspaper by the Gallup Organization of Princeton, N.J., measure "share of mind" - the cards that people say they carry and the ones they use most often. Visa topped both lists, identified as being in 70% of all households and as the No. 1 choice for 42% of the surveyed cardholders. Those readings were up by four and three percentage points, respectively, from 1994. Visa's changes were not "statistically significant," given the three- point margin of error, but the trend is clearly established: Three years ago, Visa stood at only 60% of total households, its primary usage figure at 35%. For the first time, more heads of household held a bank card brand - Visa - than held at least one retail store charge card. The margin was a razor-thin one point, but again the trend is clear: In the three years that Visa was rising from 60% to 70%, the retail cards - any of the multitude of retail brands led by Sears, Roebuck and Co.'s 50 million-plus households - fell from 72% to 69%. Meanwhile, MasterCard rose to 54% of total households from 53% in 1994 and 47% in 1992, and to 24% as "most used" from 22% in 1994 and 21% in 1992. Among the 1,027 respondents to the survey, who had at least one type of account with a financial service provider, 89% had at least one credit card. Together, the MasterCard-Visa penetration was 79% of total households, and one of those brands was the principal choice of 66% of the cardholders, up a significant five points this year. Discover, with more cards - 43 million - than in any other general- purpose program, has managed to be considered the top card by only 8%. This is the same as American Express' combined green, gold, platinum, and Optima share. Nine percent of cardholders said they used retailers' cards most, down from 13% the two previous years and 18% in 1992. In overall household ownership, Discover slipped two points this year, to 29%, after jumping five in 1994. American Express charge cards were at 21%, and Optima gave that company 5% more. The Amex aggregate was two points higher than last year and three better than in 1992. Credit cards issued by oil companies were in 35% of the households, a four-point decline, and 7% used these cards most. Diners Club, Citicorp's travel and entertainment brand, is barely a blip on the chart. Only one cardholder reported using it most. The swing toward bank cards began in the 1960s and 1970s when consumers began to prefer them to the proprietary cards of individual merchants. MasterCard was the biggest general-purpose brand before being eclipsed by Visa in the late 1970s, concomitant with the global advertising blitz accompanying the latter's name change from BankAmericard. American Banker "share of mind" findings have roughly paralleled conventional market share numbers like total cards and payment volume, though MasterCard's rebound through cobranding programs in the early 1990s was not reflected in the poll as much as might have been expected. Recent research by Payment Systems Inc., Tampa, indicates how integral cobranding has become. The cards most used by its panel of general-purpose cardholders were a cobranded MasterCard or Visa, 20%; a MasterCard or Visa from their primary bank, 22%; and any other MasterCard or Visa, 33%. Among the cobranded, AT&T Universal and General Motors cards, predominantly MasterCards, have a combined 11%; frequent-flier cards 4%, and the Ford-Citibank cards 2%. The 1995 American Banker/Gallup results were "very consistent with other data that we collect," said Harvey Bondar, San Francisco-based Visa's senior vice president of market research. "Obviously, we're pleased to see it come from an external source, but we're not surprised by it." K. Shelley Porges of Porges/Hudson Marketing Inc. in San Francisco said she was surprised by the degree of Visa's gains. "There was a period, when MasterCard initiated cobranding, when it was growing faster than Visa, but it seems that the lines have crossed," said Ms. Porges. "Visa has (recently) added more cobranding partners than MasterCard, and most research shows that Visa is the preferred brand," she added. David Robertson, president of The Nilson Report, the Oxnard, Calif.- based newsletter, described Visa as having made "all the right moves" in its incentive offerings. "Visa is just financially stronger," he said. "MasterCard through the years has done some things very well," continued Mr. Robertson. "They have shown an ability to introduce new products, but have lacked the financial wherewithal" to follow through. He attributed that to "members on its board that were not willing to go along." A spokeswoman for MasterCard declined to comment on the Gallup results and questioned the methodology, even though it is standard and widely practiced in nationwide opinion polls - including all 12 commissioned by the American Banker. In fact, relative to each other, Visa's and MasterCard's numbers in the Gallup survey closely track their officially reported U.S. results. Consumers' primary credit card choices could be a proxy for U.S. payments volume: Visa's 42% share of cardholding households was 1.75 times MasterCard's 24%, while Visa's $168 billion in the first half of 1995 was 1.81 times MasterCard's $93 billion. Visa's U.S. cards totaled 227.8 million on June 30, 1.43 times MasterCard's 159.3 million. Visa's total household penetration, 70% as measured by Gallup, was a slightly narrower 1.30 times MasterCard's 54%. Discover and American Express were similarly dismissive of their lower percentages. Both have, indeed, shown healthy volume growth, and American Express, because of its upscale and travel-oriented base, benefits from especially high per-card spending. "Our numbers on certain indicators are trending up, and have been trending up for some time," said Cathy Cummings, director of public affairs for Amex. In the Payment Systems Inc. survey, 15% of general-purpose carholders used Discover most, and 4% relied on American Express. The American Banker survey also included questions about attitudes toward lower interest rates. As in recent years, almost twice as many (44%) "agreed strongly" that they would switch for a 2% lower rate than would for a 1% break (23%). That response went up to 49% when a 5% discount was dangled before another group of respondents, who were not asked about the 1% or 2% option. Ms. Porges saw this as "bad news" for card issuers. "Brand loyalty not only has eroded, one could argue that it's nonexistent. This says that people are very rate sensitive, when as recently as five years ago they were not." Ruth Susswein, executive director of BankCard Holders of America in Herndon, Va., said, "It's good that people are willing to switch when they see cost savings. The more willing we are to switch, the longer competition will last and better deals will become available." But Joanne Black, a consultant with Business Dynamics in Nyack, N.Y., did not see this result as all that significant. "There are people who just don't switch," she said. "Once people are willing to switch, there's a group that will if it's worth it. Of the survey sample, 65% agreed strongly - and 15% more agreed less emphatically - that consumers have taken on too much debt, while 66% agreed (53% agreeing strongly) that they are trying harder to save money now than a year ago. On both questions there was little change from 1994. "People are very influenced by what they think they should be doing," Ms. Porges said. "I don't know if (debt reduction) is happening as much as people say it should."

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