MasterCard CEO Robert Selander testified in an anti-trust trial of Visa and MasterCard that giving American Express access to its banks would severely weaken the network's efforts to promote its brand, upgrade computers and gain acceptance.

Now, under network rules, the US banks can have significant stakes in both Visa and MasterCard. If banks issue these cards, they are not permitted to issue cards from other rivals like American Express. The US government has taken them to court for such rules, saying the networks do not really compete with each other and stifle innovation. Major banks own the networks, which together control more than 75 per cent of the US credit card sales.

"It could be a shattering blow because of the investments made in the joint venture to build an acceptance base and skills." Selander, a defence witness, said of letting banks issue American Express cards. "To have a close competitor come along and leverage the collective investment to its unique advantage would cause harm to MasterCard." If the US banks also were forced to ally with one brand over another, MasterCard would lose out since most banks choose to team up with larger rival Visa, Selander said.

The Justice Department suit charges Visa and MasterCard violated anti-trust laws by placing authority for their competitive decisions in the hands of banks with significant interests in both networks -- thus thwarting competition. "If duality were ended, it would have a significant adverse effect on MasterCard," he said. "We are outnumbered two to one by our primary competitor, Visa. If it goes away, it would be a very challenging situation for us it would be devastating." While the government wants banks that sit on a network's board to have the vast bulk of their credit cards issued with that brand, MasterCard puts banks that issue mostly Visa cards on its board to win them over, Selander said. "It's a business development opportunity," he said.

When MasterCard reshuffled its board a few years ago, Selander said he asked some bank representatives with mostly MasterCard portfolios to step down to put the best people on the board. The board never told Selander not to come up with newproducts or push ahead for fear of hurting Visa, he said. "The competition between us is very significant," Selandertold the court of Visa.

"We are out to try to get business from each individual customer we do business with those other guys are always out there." Instead, MasterCard fought with Visa for Citigroup Inc.'s card business last year and won. Citigroup was interested in promoting its own brand, not the network's brand, and felt MasterCard would be more flexible and allow it to do this. "As a very large and significant player, I think the competition was intense," Selander said. "It was a significant financial opportunity we put on the table to make it compelling for them.