MasterCard grows debit business with KeyBank deal

NEW YORK: MasterCard Inc, the world's second-largest credit-card network, will launch a debit card with US regional bank KeyBank on Wednesday, in MasterCard's latest bid to tap demand for payment systems that do not involve borrowing.

"Debit remains a priority for us," Patricia Preston, senior vice president of US debit product management and development of MasterCard Worldwide, told Reuters in an interview.

The World Debit MasterCard will offer rewards, discounts, and savings in an effort to attract customers.

Cleveland-based KeyBank, a unit of KeyCorp, will be the first of many partners the credit card network expects to adopt the new debit card.

KeyBank plans to issue 25,000 of the cards by the end of March, and 60,000 by the end of the first year, said Carl Stauffeneger, senior consumer product manager of KeyBank.

He added the bank, with almost 1,000 branches in 14 states, was targeting clients with an annual debit spend of around $7,500.

MasterCard said it expected to promote the new debit card in the United States before exporting it to other countries, but declined to give further details.

The company prospered in recent years as fast-spending consumers used their credit cards more. But with many Americans trying to curb their borrowing, the use of debit cards is likely to increase as consumers stick to stricter budgets.

In the United States, credit transactions represent 60 per cent of the gross dollar volume of MasterCard, while debit cards make up the rest. But debit cards volume grew 13 per cent last year in the United States, while credit cards shrank 2 per cent.

In contrast, rival Visa has a bigger presence in the debit business in the United States, with 53 per cent of Visa's total volume in debit cards, and 47 per cent in credit cards.

MasterCard has 126 million debit cards in use in the United States, while Visa has 314 million debit cards.