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MasterCard Hit by Loss of JPMorgan Debit

MasterCard shares were falling Friday after a report it was set to lose a large portion of its $59 billion debit portfolio at JPMorgan Chase to rival Visa.


(MA) - Get Mastercard Incorporated Class A Report

shares were falling Friday after a report earlier in the day that it was set to lose a large portion of its $59 billion debit portfolio at

JPMorgan Chase

(JPM) - Get JPMorgan Chase & Co. Report



(V) - Get Visa Inc. Class A Report


The debit accounts were from customers who had checking accounts at failed thrift

Washington Mutual

, which JPMorgan Chase acquired last year,


said, citing two people familiar with the issue.


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said the move won't have a material impact on MasterCard's revenue, citing a company spokeswoman.

Macquarie Research analyst John Williams wrote in a note that MasterCard is likely to keep its JPMorgan Chase credit card portfolio and at least a portion of the debit portfolio.

"WaMu represents MasterCard's largest debit portfolio," Williams writes. "

We believe that losing the WaMu portfolio is a bigger deal for MasterCard than winning it is for Visa. While this is not a significant loss for MasterCard from a revenue and profitability perspective (we believe that the annualized per share impact of the switch is no more than

10 cents a share), it is a fairly substantial blow for the company's debit platform."

The move could be particularly poignant as consumers rely less on credit cards as the recession continues. New legislation signed into law on Friday by President Barack Obama will also hamper the ability of banks, including

Bank of America

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and JPMorgan Chase, to raise interest fees and other lending terms on borrower credit cards -- making the credit card business that much more difficult.

Debit cards, on the other hand, are increasingly being used for discretionary items as consumers switch from cash to electronic forms of payment.

MasterCard's debit platform has been notably behind that of larger rival Visa's, despite the company's efforts to change that.

Shares of MasterCard were down 1.5%. Visa shares slipped, while JPMorgan Chase shares rose fractionally.