Saturday , March 23, 2019

Visa And Mastercard Grow In Europe As Issuers Drop Electron and Maestro Brands

As in the United States, Visa Inc. and Mastercard Inc. dominate card payments in Europe, but now the two U.S.-based card brands are growing on that continent partly at the expense of smaller brands they own.

European issuers are systematically switching Visa Electron and Mastercard Maestro cards to simply Visa and Mastercard, respectively, according to research released Friday by United Kingdom-based Retail Banking Research Ltd. The number of Maestro cards in Europe fell by 2% last year, while Electron cards dropped by 10%, according to RBR’s research. Both are debit card brands. But the number of Mastercard plastics increased 9%, while Visa cards grew 6%.

The reason is that issuers are looking to maximize income by rebranding cards for the wider reach the Visa and Mastercard brands offer, RBR says. “In so doing, they increase the number of merchant outlets in which their cards can be used—particularly for online payments—and therefore usage and revenue grows. This is also popular with their customers, who increasingly expect to pay by card,” the research firm says in a statement summarizing its research.

As of last year, about nine out of 10 payment cards in Europe carried either a Mastercard or Visa brand, RBR reports, when considering other logos belonging to these networks. At the end of 2016 in Europe, the Mastercard family of brands—including cards carrying the Mastercard, Maestro, or Mastercard Electronic brands—totaled 691 million, or 45% of all payment cards, RBR says. Visa-branded plastic, including Visa Electron and V PAY brands, came in for a 44% share. Private-label cards claimed a 6% share, and so-called domestic schemes took 4%. “Both Mastercard and Visa benefit from strong brand identities and vast marketing budgets,” RBR says.

At Mastercard, the shrinkage of Maestro is accelerating. The number of Maestro cards worldwide declined 4.7% year over year to 628 million in the third quarter while the total number of Mastercard-branded cards increased 10.4% to 1.78 billion, according to the company’s latest quarterly report. In 2016’s fourth quarter, the number of Maestro cards worldwide fell 2.6% to 659 million from 677 million at the end of 2015.

National or domestic card brands are in “decline,” RBR reports, and cards that bear their logos typically also carry an international brand like Visa or Mastercard. Still, the domestic schemes generated 25% of all European card payments, and 28% of value, last year, RBR’s research shows. The cards are particularly popular in France, Germany, and Italy, the firm says.

But Mastercard and Visa may face competition in the European market from China’s UnionPay card, which “doubled its presence” on the continent in 2016, says RBR analyst Daniel Dawson, in a statement.

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