Citi and MasterCard Sign Expanded Deal on Consumer Credit Cards
Citigroup Inc. has reached an agreement to shift some of its consumer credit cards to MasterCard over the course of the next 10 years.
The company said it will continue to maintain Citi credit cards on other networks, including consumer co-brands and commercial cards, but it plans to work more closely with MasterCard in the coming years.
While the terms of the agreement have not been disclosed at this time, the shift will mean additional business for MasterCard. Barclays Plc analyst Darrin Peller told Bloomberg that MasterCard could earn as much as $125 million in incremental revenue from the switch. This would also lead to a notable decrease in volume for Visa.
“Deepening our partnership with MasterCard should speed the delivery of solutions for our consumer, small business and merchant clients, and add meaningful value to Citi,” said Jud Linville, CEO of Citi Cards.
Visa reached a similar agreement with JPMorgan Chase in 2013, but that came with much more opportunities. Visa gained 20% of Chase’s portfolio, along with a deal to develop an exclusive processing service that helped banks negotiate terms with merchants. MasterCard’s gain with Citi may not make up for its loss with Chase a few years back, but it does provide a sense of stability for the company over the next decade.