"Banks freed to offer both MasterCard and Visa credit cards", National Post, Tuesday, November 18, 2008
This article talks about how Canadian banks are now free to offer both MasterCard and Visa credit cards. In the past decades, there were old restrictions that made the banks choose either MasterCard or Visa. However, it still may take some time before the issuers make any changes to their cards. They will have to work it all out first since they've been operating with only one brand or the other for 35 years. This is going to be a fundamental change to businesses in Canada. Credit rating agencies say that Canadian credit card debt levels are lower than in the US and consumers pay off more of their card bills than Americans.
In chapter 14, we learned about cash control and banking. We also learned about bank credit cards. Most small retail stores do not offer their own VISA or MasterCard systems; they use credit cards sponsored by major banks. With bank credit cards, consumers can make purchases on short-term credit at any retail store that accepts credit cards. This article relates to chapter 14 by talking about how the change of the restrictions for issuing MasterCard and Visa will be a fundamental change for the business model of Canada. We learned in chapter 14 that credit cards are used very frequently, and so any changes would make huge changes to many individuals and merchants.
In my opinion, I think it will take a long time before the banks actually start issuing both MasterCard as well as Visas. They'd have to do a lot of work to figure out how to make everything work out. Now that banks can issue both brands of credit cards, there will be more competition, and it'll be harder to keep the customers from moving back and forth between card providers for better deals. In addition, with the current weakening economy, I think that less people will use credit cards to make transactions. This could affect the banks' plans on issuing new credit cards.
http://www.nationalpost.com/story.html?id=969984
