Bank of Ireland exits Visa deal and changes to MasterCard

Bank of Ireland has ended its long-standing relationship with credit card company Visa and has started making contact with hundreds of thousands of its customers, alerting them to its plans to replace their existing Visa credit cards with an alternative from MasterCard.

The move signals the end of a relationship between the credit card provider and the bank, which dates back more than 40 years.

Bank of Ireland was tight-lipped as to why the relationship was coming to an end but industry sources said it was purely a business decision and MasterCard had offered better terms in a recent round of negotiations.

In a statement, Bank of Ireland confirmed that it had it had appointed MasterCard “as its strategic partner for all credit cards”.

Phased switchover

The agreement will see 40 per cent of the bank’s credit cards migrating from Visa to the new provider on a phased basis between this month and June 2016. There will be no change for Visa Debit cardholders.

The bank was at pains to point out that consumers would not feel any financial effects in the move.

While Visa as a brand is among the most recognisable in the world, it does not issue cards, set credit limits or decide the rates and fees consumers pay. It merely provides the branded product and the bank retains complete control over the day-to-day administration of the account.

“Customers need take no action at this time and will automatically receive their new card with their credit limit unchanged and any balance transferred,” the bank said.

It said the new cards would have additional features which would allow for contactless transactions as well as the implementation of instalment plans which allow customers to spread the cost of purchases over €500 at a rate of 6.9 per cent APR over 12 months.

Customer loss

The news will be a blow for Visa Europe, which is losing one of its biggest credit card customers in the Republic. The loss, however, is likely to be more than offset by its dominance in the debit card sector here.

Visa has debit card contracts in place with all the State’s banks and its contactless card technology is slowly gathering pace with a growing number of retail outlets accepting contactless transactions up to a value of €15 . Late last year, Visa recorded its 10 millionth contactless transaction in the Republic.

Expenditure on Irish Visa cards reached a record high of €28.4 billion last year, up 32 per cent on the previous year. All told, €1 in every €3 of Irish consumer spending was done by Visa card last year.