Wal-Mart Stores Inc. (WMT:US) chose MasterCard Inc. (MA:US) to handle transactions for the merchant’s store-branded credit cards, ending a nine-year relationship with Discover Financial Services. (DFS:US)
The Sam’s Club warehouse unit also extended its agreement with General Electric Co.’s (GE:US) retail finance unit to provide the retailer’s store-branded cards in the U.S. and Puerto Rico, Wal-Mart, the world’s biggest retailer, said today in a statement. The Sam’s Club co-branded cards also will switch to MasterCard.
MasterCard is the second-biggest U.S. payments network, behind Visa Inc. (V:US), which was sued by Wal-Mart last week for allegedly conspiring with banks to fix transaction fees. The retailer, which has been fighting with both networks in court for more than a decade, is seeking at least $5 billion in damages from Visa, claiming violations of federal antitrust laws.
“The conversion of the Wal-Mart and Sam’s Club co-brand programs to MasterCard is further evidence of the strong and growing partnership between our organizations for the benefit of consumers,” Craig Vosburg, MasterCard’s chief product officer, said in an e-mailed statement.
The new Sam’s Club cards will be issued to customers in June, with Wal-Mart-branded cards to follow later this summer, Brooke Buchanan, a spokeswoman for the Bentonville, Arkansas-based retailer, said in an interview.
The Wal-Mart and Sam’s Club Discover cards issued by GE will be phased out over the next year, Jon Drummond, a Discover spokesman, said in an e-mailed statement. The change won’t affect other cards issued directly by Discover, which will continue to be accepted by the retailers, he said.
Wal-Mart has had a relationship with Discover since 2005, when the network, then a unit of New York-based Morgan Stanley, reached an agreement with the retailer and GE’s finance arm to introduce a credit card targeting the merchant’s 100 million customers.
About three months earlier, the U.S. Supreme Court rebuffed an effort by Visa and Purchase, New York-based MasterCard to prevent their 34,000 member banks from issuing cards on competing networks, including Discover and New York-based American Express Co. (AXP:US)
MasterCard shares were little changed at $74.55 at 9:34 a.m. in New York. Discover, based in Riverwoods, Illinois, rose 0.2 percent to $59.57. Wal-Mart was little changed at $77.49.
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