Wal-Mart’s Credit-Card Portfolio To Convert To MasterCard

Wal-Mart Stores, Inc. (NYSE:WMT) announced today, April 4th, that its co-branded credit card portfolio will convert to Mastercard Inc (NYSE:MA) later this year.

Mastercard Inc (NYSE:MA) has been battling in recent years to win more co-branded partnerships to boost transaction volume over its payment network.

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Cards to carry MasterCard’s logo

In a deal struck by the retail giant with General Electric Co’s banking arm, Wal-Mart Stores, Inc. (NYSE:WMT)’s co-branded credit cards will soon carry MasterCard’s logo. Wal-Mart’s co-branded cards, like other co-branded cards, offer discounts and other perks for shopping at the retailer’s stores. The cards are issued by a bank, which in the case of Wal-Mart is GE Capital Retail Bank.

Last month in its SEC filing, General Electric Company (NYSE:GE) said that it would spin off its North American retail finance unit in an IPO, as a step towards reducing its GE Capital division. After the IPO, the unit will operate under Synchrony Financial.

General Electric Company is making a concerted effort to reduce credit risks, and was planning to shrink its finance business by 2015 through the divestiture of its North American consumer lending unit. The strategic move is arguably considered to be the biggest step in restructuring GE Capital’s portfolio to shield the parent company from the intense market volatility such as was seen during the 2008-09 financial crisis.

The North American consumer lending business includes credit card deals with retail giants such as Wal-Mart Stores, Inc. (NYSE:WMT) and J.C. Penney Company, Inc. (NYSE:JCP).

Sam’s club follows suit

Sam’s Club, a division of Wal-Mart Stores, Inc. (NYSE:WMT) too has finalized a multi-year agreement with GE Capital Retail Bank to extend their existing relationship to provide Sam’s Club-branded credit cards to club members in the U.S. and Puerto Rico.

The arrangement involves GE Capital’s Retail Finance business continuing to manage and service the credit card programs for Sam’s Club Savings, Business and Plus members. The transition to MasterCard will provide members with a broader card acceptance network, as well as more robust features and benefits.