Columbus, Ohio-based Huntington Bank recently announced a new branding agreement with the payment processing company MasterCard. Huntington will be replacing the debit cards of all their customers, which are currently branded with the Visa logo, with Platinum Debit MasterCards. The changes and upgrades will affect the approximately 1.5 million debit card holders who are customers of Huntington, both consumer and business.
In 2010, Huntington’s debit card customers made some 6.7 billion dollars-worth of purchases, as claimed by the payments industry newsletter Nilson Report.
“This is a big deal for us and a pretty big deal in the universe of card conversions as well,” said Steve Steinour, chief executive of Huntington Bank, to The Wall Street Journal.
The bank new contract between Huntington and MasterCard will likely expire somewhere between 5 to 7 years, although neither company has disclosed the exact terms or financial details of the arrangement. The deal involves only debit cards, Huntington’s credit cards will be unaffected. Issued by a Bank of America unit, their credit cards bear the logos of both MasterCard and Visa.
Visa and MasterCard themselves do not actually lend out any money to consumers, despite the fact that most debit, credit and gift cards bear the logo of either one company or the other. What both companies do is participate in the processing of the payment transaction that occurs between the retailer’s bank and the card-issuing bank each time a consumer uses plastic to make a purchase.
“The more debit cards that have MasterCard’s logo on them, the more payment volume and transactions MasterCard will be processing, and therefore the more revenue and profit MasterCard will be earning,” said analyst Jason Kupferberg, who works with Jefferies Group Inc., according to The Wall Street Journal.
According to Nilson Report, the United States debit purchase volume reported by MasterCard last year in 2010 was $333 billion in 2010, while Visa’s debit purchase volume for the same year was $1.05 trillion.
Visa, which has a great number of exclusive processing relationships with more bank than their competitor MasterCard, uses a debit Network called Interlink. The debit card processing network MasterCard is affiliated with is called Maestro.