Visa Tightens Rules on Credit Card Issuance

Following the wild success of AT&T;’s Universal credit card, Visa U.S.A. said Tuesday that it changed regulations for non-bank members seeking access to its profitable credit card system.

A Visa official denied that the changes, effective immediately and possibly retroactive, were in response to the Universal card’s popularity.

Bank members have objected strenuously to American Telephone & Telegraph Co.’s presence in the profitable Visa and Mastercard credit card systems, charging that the powerful telephone giant was stealing business from bank credit cards.

In the past, banks welcomed non-bank members to issue Visas and Mastercards, believing that it put more of the credit cards into people’s wallets and it helped gain even more acceptance among merchants.

But banks have said AT&T; is not like the typical non-bank credit card issuer, such as charitable and educational institutions, that issue “affinity” cards. Affinity cards let non-member organizations partner with member banks and participate in a credit-card program.

On Tuesday, Visa sought to restrict how non-banks can issue Visa cards.

Under the new rules, affinity cards cannot be used to access any account other than one maintained by a Visa card-issuing financial institution; affinity programs must honor all Visa cards, not just its own; and non-members are prohibited from financing more than 25% of their receivables from the credit card programs.

Officials at a local Mastercard office in Los Angeles could not be reached for comment as to whether they would be making similar rule changes.

AT&T; said Visa’s rule changes would not affect its Universal card operations. “Our reaction is that the rule changes by Visa have absolutely no impact on AT&T;’s Universal card program,” Bruce Reid, an AT&T; spokesman said.

As of Sept. 30, AT&T;, which issues its Universal card through Universal Bank of Columbus, Ga., said it had opened 3.1 million accounts.