Wachovia Will End Partnership with MBNA and Become a Direct Credit Card Issuer
By Lydia Verret, CardRatings.com Reporter
After months of speculation, Wachovia recently announced an end to its partnership with MBNA in which MBNA issues Wachovia-branded credit cards. The decision comes four months after rival Bank of America and MBNA announced plans to merge in January of 2006.
Wachovia and MBNA will work together to ensure a smooth transition during the gradual end of their five year partnership. Both banks plan to offer a replacement credit card to current cardholders. Customers will be able to choose to carry cards from both banks, one bank, or neither.
Although few details have been announced, MBNA is expected to pay Wachovia a $100 million termination fee, which will help Wachovia fund the cost of getting back into the credit card business. A credit card processing network has yet to be chosen by Wachovia, however, the leading options are Visa and MasterCard.
Wachovia believes it will be able to successfully sell cards to existing account holders through its network of bank branches and brokerage offices, as well as through mailings as has been the industry trend over the past several years. Wachovia hopes to build stronger relationships with its customers by reminding them that Wachovia is not only offering them a line of credit, but also provides them with other banking services. In short, Wachovia hopes to convince their cardholders that they are Wachovia customers first and foremost.
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