USAA Dumps Mastercard For Visa
- USAA, one of the largest domestic issuers of debit and credit cards, said it is switching to Visa Inc (NYSE: V) from Mastercard Inc (NYSE: MA)
- The Wall Street Journal noted that USAA's relationship with Mastercard spanned roughly 30 years and processed $26 billion of purchases last year.
- Shares of Mastercard were lower by nearly 2 percent in Monday 's pre-market session while Visa's stock gained more than 1 percent.
USAA, one of the largest domestic issuer of debit and credit cards, just ended its 30-year relationship with Mastercard in favor of rival Visa.
The Wall Street Journal commented that it is "extremely rare" for an issuer like USAA to switch network affiliations after a long relationship. However, the publication cited a statement from USAA stating that its new deal with Visa provides additional benefits that Mastercard may not have been able to match. One such benefit includes the elimination of foreign transaction fees.
USAA is the 10th-largest domestic credit-card issuer with $17.53 billion in outstanding loans as of June 30, according to a Nilson Report. Meanwhile, USAA is Mastercard's largest debit-card issuer, with $26 billion of purchases made on its cards in 2014.
Mastercard confirmed the news with WSJ, noting that "it reached a point where the economics did not make sense" and "this is part of our business and we factor this into how we work."
Shares of Visa gained more than 1 percent ahead of Monday's opening bell. At the same time, Mastercard's stock was lower by more than 2 percent.
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