Visa (V) Replaces MasterCard (MA) as RBS's Chosen Debit-Card

The Wall Street Journal is reporting that the Royal Bank of Scotland has chosen Visa (NYSE: V) as its new debit brand for the US and UK, replacing MasterCard (NYSE: MA). Citing recent Nilson Report data, the article notes that RBS is ranked the fifth-largest debit-card issuer in the UK last year with $48.5 billion of transaction volume, and tenth-largest in the US with $11.5 billion of transaction volume last year. Notably, RBS has decided to stick with MasterCard for its credit card transactions in both countries.

Deutsche Bank is out with a research note considering the impacts of the switch from MasterCard to Visa. The firm sees about 11.5 million debit cards in the UK and 3.4 million in the US being switched over starting mid-2009. Deutsche does not expect the development to change its forecasts for either Visa or MasterCard, but does call the move "a significant loss for MasterCard, particularly given the timing." The firm said, "In essence, MasterCard’s 4th largest debit account in the US has chosen to switch to Visa just as MasterCard should be gathering better momentum in debit after the recent launch of IPS, its cutting-edge new debit processing platform."

Deutsche Bank currently has a Buy rating on both companies. The firm has a $93 price target on Visa and a $350 price target on MasterCard.

Investors seem to be responding to the announcement: shares of MasterCard are currently off 8.6%, or nearly $19, while shares of Visa are down less than 2%.

Visa, Inc., through its subsidiaries, operates retail electronic payments network worldwide.

MasterCard Incorporated, together with its subsidiaries, provides transaction processing and related services to customers principally in support of their credit, deposit access, electronic cash and automated teller machine payment card programs, and travelers cheque programs.

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