Wells Fargo Bank, the nation's second-largest debit card issuer, has decided to sever its ties to Visa's Interlink network and join MasterCard's competing program.
The San Francisco-based bank said it will convert its automated teller machine cards to MasterCard's two brands - Maestro for on-line debit services, and Cirrus for international ATM access - during the second quarter of this year.
The decision, announced last week, is a big victory for MasterCard and especially Maestro, which has been struggling to close Interlink's big lead in the domestic market.
Debra Rossi, a senior vice president at Wells Fargo, said the choice was strategic, with an eye toward global competition and brand strength.
"Maestro has the international perspective and presence that is important to us," she said. "It has more locations globally, which is something our customers want."
The Maestro-Cirrus affiliation could give Wells Fargo a way to set itself apart from its closest competitors, Bank of America and First Interstate Bank of California, which continue to issue Interlink cards.
The three West Coast giants and the defunct Security Pacific National Bank launched Interlink in 1985, contracted with Visa to operate the system, and in 1991 sold it outright to Visa.
By that time, Interlink was well established in West Coast supermarkets and other outlets. It is still by far the most active of the regional debit programs with which it is usually compared, and on a national scale at yearend it reported 52,000 merchants, 30 million live cards, and 163 million annual transactions.
Maestro U.S.A.'s most recently reported numbers for the United States are 45,000 merchants, not including Wells' 3,000, and 10 million live cards. The inferiority is due mainly to Interlink's head start in California. Outside the United States, MasterCard says its on-line debit network is more extensive than Visa's.
While Wells is viewed as a big defection from Visa, the announcement was not much of a surprise to industry insiders, who cited Wells Fargo's closer historical connection to MasterCard. It was among the original banks that formed the Master Charge association in the 1960s as a counterweight to Bank of America's BankAmericard.
"Both (MasterCard and Visa) have fine programs. The pros and cons of each balance out," said John B. Benton, president of Benton International, a Torrance, Calif.-based consulting firm.
"It comes down to stylistic judgment, culture, and history when choosing a partner," added Mr. Benton. "Wells obviously thinks its style matches MasterCard's."
"We see this as . . . another strong U.S. bank that decided to support our program, our vision, our strategic direction," said Arthur D. Kranzley, Maestro U.S.A.'s president and chief executive. "Wells shares the same vision as MasterCard regarding the future of the payments system."
"The benefits are both short- and long-term," said Wells Fargo's Ms. Rossi. "In the short term, it will benefit our customers because they will have more places where they can use their debit cards.
"Over the long term, we are looking at the entire electronic payments business, including smart card strategies, and we believe MasterCard has a very strong long-term vision."
Wells Fargo is not alone in this perception. Several other banks have recently joined the Maestro ranks, including Bank of New York and Chemical Bank.
Interlink is not badly damaged by the loss of Wells Fargo, said Joel Friedman, an Andersen Consulting partner in San Francisco, who is close to Visa.
"Interlink has significantly more market presence in the United States," he said. "This isn't going to hurt anybody. In fact, good healthy competition will stimulate growth in the industry and everybody wins."
Said a Visa spokeswoman: "We are sorry that Wells has chosen a competitive on-line product, but we can understand that, as a longstanding member of the MasterCard board, they may have felt some pressure. We still have 70 of the top 100 banks issuing our cards."
Wells Fargo will be converting 3.1 million Interlink cards to Maestro and 4.8 million Plus ATM cards to Cirrus. Under Visa's anti-duality rules, banks cannot issue both the MasterCard and Visa debit products.
Since nonduality does not apply to merchant processing, Wells will support both Interlink and Maestro for its retailing clients. The bank's merchant processing division handled 37 million debit card transactions in 1994.
Wells Fargo expects that its merchants will be able to accept Maestro- enhanced ATM cards at points of sale during the second quarter.
Wells will also add the Explore regional point of sale service, run by Star System Inc., to its ATM capabilities. The bank previously had not participated in Explore, since Interlink has such a strong presence in California.
