Dean Witter, Discover & Co. and NationsBank will issue a Prime Option MasterCard, a venture that will provide consumers a wide range of financing options and create 150 jobs in Utah in early 1994.
MountainWest Financial of Salt Lake City will handle the customer service and collections for the Prime Option MasterCard. Moun-tain-West Financial has been owned by Dean Witter since 1990.Phil Ware, senior vice president of MountainWest Financial, said the MasterCard venture enables Dean Witter to offer a consumer credit card other than Discover card. "We have wanted to get into business and we haven't been able to. This was one way to do it," Ware said.
NationsBank will be the issuer of the card. It is a co-branded product between NationsBank Card Services and Dean Witter.
As a part of the agreement to launch the program, Dean Witter and MasterCard International agreed to settle antitrust litigation pending in the Southern District of New York City concerning the application by two Dean Witter affiliates to join MasterCard.
The Prime Option card will provide consumers with value features that include no annual fee and three competitive financing options. Customers will receive a no-interest 25-day grace period on purchases and cash advances, a 9.9 percent interest rate on current and previous month's purchases and traditional interest of prime plus 9.9 percent on older purchases. Other features include skip-a-payment, billing date choice and 24-hour customer service.
Meanwhile, MountainWest Financial awaits a ruling by the 10th Circuit Court of Appeals, which is reviewing a 1992 federal jury verdict that Visa U.S.A. violated federal antitrust by not letting Sears Roebuck & Co. issue a Visa card along with its Discover card. The trial was conducted in Salt Lake City.
MountainWest sued Visa on the grounds that the collective action of Visa's 6,000 members in excluding MountainWest violated antitrust law by unreasonably restraining competition in the market for general purpose credit cards.
In April 1993, a trial judge upheld the jury's decision. Visa then appealed the verdict.
If the appellate court finds in Sears' favor, Dean Witter Financial Service (Sears' financial arm) could also issue Visa cards. That would mean more work for Moun-tain-West Financial.
"We'd like to think maybe if the Visa case will be completed to our satisfaction, there would be more (hires)," Ware said.