Not long ago VISA promoted itself as "One World, VISA". VISA envisioned itself as the dominate payment system in the world, a system transcending all brands and transparent to all currencies. VISA simply visualized itself as the world's universal currency. Indeed for 1997, VISA captured, for the first time, more than $1 trillion in global charge volume, nearly twice MasterCard's and about six times American Express' global charge volume. While the final tally is not in yet, it is projected the VISA brand handled about $1.4 trillion in worldwide charge volume during 1998.
     VISA's dream may come apart if the three largest consumer banks in the U.S. have their way. Last month CitiGroup made it abundantly clear they want to shed the VISA brand in favor of their own brand. CitiGroup's co-CEO said he wants VISA out of the marketing business. CitiGroup's vision is that VISA be reduced to a payment clearinghouse. Despite CitiGroup's 14% share of VISA U.S.A.'s annual charge volume, VISA's board of directors this month voted down any notion of relegating the VISA logo to the back of CitiGroup's card. VISA's decision infuriated CitiGroup's top management so much they resigned two board seats. CitiGroup is reportedly now in discussions with MasterCard to convert CitiGroup VISA cards to MasterCards. In return MasterCard may go along with CitiGroup's desire to emphasize the "Citi" brand and lower its association fees.This could have broad ramifications. Due to mergers and acquisitions CitiGroup now has set a goal of one billion consumer customers worldwide. Potentially there could be more CitiCard/MasterCard users in the world than current VISA users.
     The other two largest consumer banking franchises in the U.S., Bank One and Bank of America, are rumored to support CitiGroup's "dump the VISA, MasterCard brand" initiative. As a matter of fact, Bank of America resurrected its BankAmericard brand last year to celebrate the brand's 40th birthday. Bank One does not have a clear branding strategy yet. It's too busy digesting numerous mergers and acquisitions. Bank One currently issues cards under the Bank One, First USA and First Card name.
     If the VISA or MasterCard brand goes to the back of the card or slips off the card completely, then the U.S. market will look very different.
 

Future Credit Card Brand Scorecard
(number of cards-in-force; US Only)
VISA	153 million
MasterCard	120 million
CitiCard	70 million
Bank One Card	57 million
Discover	47 million
American Express	28 million
BankAmericard	26 million
Based on end-of-year 1998 statistics
Source: CardData (carddata.com)

     If Chase, MBNA, Household, Capital One, and Fleet Bank join the re-branding bandwagon somehow, then about 70 million additional VISA cards and 58 million additional MasterCards would be up for grabs.
In a real twist, if MasterCard obliges banks to brand their own products and assesses issuers lower fees then MasterCard could become the new card brand behemoth knocking VISA off its lofty pedestal.
       The big question is: How will consumers perceive all these new brands? Will consumers benefit from a brand war?
     There is no doubt consumers would be bewildered by all these brands. Consumers like choice, but they also like things simple. However, a brand war could produce higher value cards -- more perks and more utility. It's just not clear how all this would play out.
     Nevertheless, CitiGroup seems to envision: "One World, CitiCard".  MasterCard may also share this vision.

       

CRIMINAL  VICTIMS

National Consumer Protection Week is being observed this month. To kickoff the event the Federal Trade Commission and National Association of Attorneys General    announced that 17 law enforcement agencies have filed 43 actions against defendants who claim to help consumers obtain new credit histories through new identification numbers, a practice known as "file segregation." The suspect firms sell instructions about how consumers can substitute federally-issued, nine-digit employee identification numbers or taxpayer identification numbers for social security numbers, and use them illegally to build new credit profiles. For fees ranging from $29.95 to $200.00, the companies offer to sell consumers the instructions they need to apply to the Internal Revenue Service for employer or taxpayer identification numbers. The FTC also noted that the Internet has enabled this scam to spread far and wide. The worst part of this scam is the victim ends up a criminal. Using a false social security number, such as a taxpayer I.D. number, to apply for credit violates federal law and has been prosecuted vigorously by the IRS and U.S. Attorneys. National Consumer Protection Week is sponsored by the FTC, National Association of  Attorneys General, U. S. Postal Inspection Service, National Association of Consumer Agency Administrators, National Consumers League, and American Association of Retired Persons.

MAGIC  MOMENTS

VISA reported this month there were 16,826 winners in the 'Magic Moments' holiday promotion. All together the winners were awarded free purchases totaling more than $1.2 million. Between Nov. 1 and Dec. 31, VISA randomly selected, each day, a one-second magic moment when VISA card purchases were free. The moment with the most transactions occurred on Dec. 8 with 1,332 transactions. The largest free purchase was made at an auto repair shop in Virginia for about $6,000. The smallest free VISA purchase was made at the U.S. Post Office for 32 cents. Other free VISA purchases included jewelry, college tuition and cruise tickets. VISA says member support was extensive with nearly 100 million statement stuffers distributed.

CARDSTUFF  PROTECTION

American Express is now offering a free brochure to help consumers learn how to protect their purchases.For a free copy of “Protecting Your Purchases,” contact American Express, P.O. Box 4635, Trenton, NJ 08650-9874. American Express has also released a free brochure on Internet shopping, “Cybersmarts,” which is also available from the same address.

DINERS CLUB AWARD

'Club Rewards' by Diners Club won coveted honors for the second consecutive year, by being awarded the prestigious '1998 Freddie Award' for the "Best Frequent Traveler Affinity Charge/Credit Card" by the readers of InsideFlyer magazine. In addition to being named the favorite program of the year, voters also awarded Diners Club a 9.3605 out of a possible 10 in terms of value delivered. More than 82,480 frequent flyers determined the winners by written or on-line ballots. On average, the voters belong to seven loyalty programs.