Visa U.S.A. will continue to let its issuing banks use the Pulse EFT Association’s debit network, despite the January purchase of Pulse by a Visa rival, Discover Financial Services.
Visa’s decision, announced Tuesday, came less than three months after MasterCard International said it was reviewing its relationship with Pulse in response to the deal.
At the time, MasterCard said it was considering removing the Pulse logo from its branded cards but would not say whether it wanted issuing banks to stop using the Pulse network.
A MasterCard spokesman said in an e-mail Wednesday that the company had not made a decision and was still evaluating the “new Discover entity.”
Discover is owned by Morgan Stanley, which recently said it would spin off the company.
Visa has long prohibited the logo of competing general-purpose card networks and their subsidiaries to appear on its cards, said Stacey Pinkerd, Visa’s senior vice president for consumer debit products.
Visa cards do not route transactions over those competing networks: American Express Co., Discover, MasterCard, and MasterCard’s PIN debit network, Maestro, Mr. Pinkerd said. (The exception, MasterCard’s automated teller machine brand, Cirrus, occasionally appears on the back of Visa cards because it is an ATM-only network, not a general-purpose one.)
Pulse, in Houston, carries only PIN debit transactions. Until Discover bought it, Pulse functioned as an association of banks. Both Visa and MasterCard have permitted the Pulse logo on their branded cards for many years.
Maintaining the status quo prevented inconvenience for Visa members, Mr. Pinkerd said.
He said that “a lot of” Visa members participate in Pulse, “and we didn’t want to disrupt them” by forcing them to reissue cards to their customers. “As long as Pulse continues to operate in the way it has, the potential for consumer confusion isn’t there.”
Stan Paur, Pulse’s president and chief executive, said, “We welcome [Visa’s] announcement and believe it will eliminate speculation … confusion, and unnecessary controversy for the industry.”
Mr. Paur said Visa probably wanted to avoid affecting “customers that participate in both programs.” He also said he remained confident that MasterCard would follow Visa’s lead.
Under Visa’s rules, which will remain unchanged, signature debit transactions initiated with a Visa card are routed on VisaNet, and PIN debit transactions can be routed on one of several PIN debit networks.
Utility companies and other billers that initiate PIN-less debit transactions may continue to do so, but Visa also said Tuesday that the companies must comply with consumer requests that payments be sent across VisaNet.
Mr. Pinkerd said some consumers had complained that they thought these types of transactions were similar to signature debit and would earn them debit card reward points. They were taken aback to learn that the payments were instead counted as PIN debit transactions.
In certain cases issuers charged consumers a fee — some banks charge up to $1 a transaction for using PIN debit at the point of sale.
Visa, of San Francisco, also said Tuesday that its issuers can now remove the Visa PIN debit brand, Interlink, from the back of cards, freeing up more area for the issuer. One caveat: No other PIN debit brand can be displayed.
MasterCard, of Purchase, N.Y., had announced a similar policy. Mr. Pinkerd said research has shown that most consumers are aware their cards have PIN debit capabilities.
