Chase launches its first Mastercard-branded consumer credit card in 5 years
Visa and JPMorgan Chase & Co. are in the middle of a 10-year merchant services agreement that gives Chase merchants certain advantages with the expected goal of favoring Visa card volume. But it’s not an exclusive arrangement.
After months of negotiations, Chase is rolling out its first new Mastercard-branded consumer credit card in five years with a loyalty program that reflects pandemic-influenced habits and suggests travel will soon resume, the companies announced Monday.
The Freedom Flex World Elite Mastercard falls under Chase’s longstanding Freedom loyalty brand for credit and debit cards and mirrors some elements of Chase’s existing Freedom Visa credit card programs, including cash-back deals with DoorDash and Lyft, but there are certain differences in the two networks’ versions.
The move underscores Mastercard’s ongoing rivalry with Visa to score deals with banks, and it also points to Chase's need to negotiate with both card networks in an increasingly competitive arena.
“Card issuers really need to be able to play one network against another in negotiations and you don’t ever want to unplug that ability,” said Brian Riley, director of Mercator Advisory Group’s credit advisory service.
Visa and Mastercard seemingly offer commoditized services — merchant acceptance — but since the two largest card networks became independent companies after their respective IPOs within the last decade, their services have diverged in key areas, Riley said.
“Visa and Mastercard have different ways of handling disputes, and there are also significant departures in the way merchant category codes play out, so there are some real nuances separating the networks,” he said.
The newest Chase Mastercard launches Sept. 15 with no annual fee and gives users 3% back on drugstore purchases, 3% back when dining out and 5% on travel purchased through the Chase Ultimate Rewards platform.
Freedom Flex Mastercard users will also get 5% cash back on rotating bonus categories like grocery stores and streaming, for up to $1,500 in combined purchases. World Elite benefits include $10 off for every five Lyft rides taken per month plus digital-shopping benefits from online shipment service ShopRunner.
Chase currently is giving all consumers who sign up for Visa or Mastercard-branded Freedom credit cards $200 cash back after spending $500 in the first three months, plus 5% cash back on supermarket purchases for the first year.
Mastercard has long sought a broad-appeal consumer rewards card with Chase, said Linda Kirkpatrick, president of U.S. issuers at Mastercard.
“We worked on this a long time, because putting Chase’s customer-service focus together with Mastercard benefits like Priceless Experiences will be powerful,” Kirkpatrick said.
All Chase Freedom Flex card customers have free access to Priceless Experiences that were updated this year in light of the coronavirus pandemic, she said.
“Instead of doing wine-tastings live, we did a video event to learn about wine with an award-winning sommelier and millions of people tuned in,” Kirkpatrick said. Mastercard also hosted exclusive live music events on video within its Priceless Experiences program.
Freedom Flex is Chase’s first new Mastercard program for consumers in years, but Chase continues to support two co-branded Mastercard credit cards with travel companies IHG and United.
Kirkpatrick said that despite the overall slowdown in air travel, many consumers continue to lean toward earning and redeeming credit card travel rewards.
“People may not be flying as much, but they’re renting cars and Airbnb locations, keeping travel cards relevant,” she said.
But flexibility was Mastercard’s top goal with its new Chase card because consumer needs are hard to predict in the current environment.
“Right now consumers' needs are changing; they want their loyalty to be rewarded in different ways,” Kirkpatrick said.