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The Green SheetGreen Sheet

Wednesday, April 23, 2008

Adios card Associations

March 19, 2008, was not only the date that Visa Inc. began publicly trading its stock on the New York Stock Exchange, but it also represented the demise of the term "card Association."

In their earliest incarnations, the card Associations – now called Visa Inc. and MasterCard Worldwide – were collections of banks that cooperated on the branding of credit card issuing and acceptance. These member-bank associations also built and maintained networks over which electronic transactions were processed.

MasterCard was founded in 1966 as the Interbank Card Association (ICA). ICA trademarked the name "Master Charge," which morphed into MasterCard in 1979. In recent years it was known as MasterCard Inc. and MasterCard International before settling on its corporate name MasterCard Worldwide as it transitioned from a card Association into a corporate entity.

In May 2006, MasterCard went public, leaving Visa as the lone standard bearer of the card Association torch.

But that flame would not remain lit for long. In October 2006 Visa began reorganization for its own initial public offering. A year later, Visa completed its restructuring, at which time Visa Canada, Visa U.S.A. and Visa International became subsidiaries of Visa Inc.

Visa Europe, however, remained a separate entity from Visa Inc. As a membership association, Visa Europe became a Visa Inc. licensee with a minority interest in the company.

Now that both Visa and MasterCard are publicly traded companies, the term card Association no longer applies. They are stand-alone businesses now rather than associations of banks, although the electronic networks they operate make them unique among all other public companies.

In consequence to going public and having their stock traded on the NYSE, Visa and MasterCard's finances are now open to public scrutiny. The companies are beholden to stockholders and to the dictates of the Securities and Exchange Commission. They are required by federal law to submit quarterly and annual financial reports to the SEC, and to make those reports available to investors and the general public.

So Visa now joins MasterCard, American Express Co. and Discover Financial Services as card brands. AmEx and Discover were never considered card Associations because, as card issuers themselves, they never functioned as a collection of issuing banks. Going forward The Green Sheet will refer to the card companies as card brands. Like the Mondex card, one of the first general purpose prepaid cards from the 1990s, the term "card Association" has been officially deposited into the ever expanding dustbin of credit card lore. end of article

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