Announces New Competitor to Visa, MasterCard : Sears to Test General-Use Credit Card
Sears, Roebuck & Co. said Wednesday that it will introduce a new credit card that will offer the services of a conventional bank credit card and at the same time provide access to the retailing giant’s array of financial services.
The Chicago-based company said it will begin testing its new “credit-financial services card” by the end of the year in pilot markets, which it declined to identify. The card will be issued by Greenwood Trust Co. of Delaware, the newest addition to the Sears Financial Network, which includes banking, brokerage, real estate and insurance services.
Similar to conventional Visa and MasterCard bank cards, Sears’ new card will be accepted by a wide range of retail, travel, entertainment and service providers, which will also accept Sears’ original credit account card, a Sears spokesman predicted.
“It does what Visa does and does what MasterCard does, and it does some things that are more than what is traditionally provided by bank cards,” the spokesman said. The new Sears card will include a package of financial products and services, including what the company described as a “family savings account.”
The spokesman said he could not elaborate on the account. Local banking officials said they know of no type of account known as a “family savings account.”
The spokesman also said he could not provide details on the “significant” savings that Sears said the card would provide to both consumers and service establishments. He said such matters are still in the development stage.
Spencer Nilson, whose Nilson Report covers the credit industry, conjectured that those savings might occur for merchants in the form of a fee lower than the 3.3% of sales that they now pay to Visa and MasterCard. For consumers, he said, the Sears card might be free or carry a lower fee.
Industry watchers and analysts have long expected Sears to unveil some consumer financial service that would allow the company to take advantage of its 40 million store credit accounts to market the services offered by its Dean Witter, Coldwell Banker, Allstate Insurance and Sears Savings Bank units. The units, known as the Sears Financial Network, are now operating at centers in 302 Sears stores nationwide.
Sears’ move also was seen by some as a step toward establishing a nationwide consumer banking network. Sears recently sold off Greenwood Trust’s commercial loan portfolio. Since only institutions that engage both in commercial lending and collecting checking account deposits are legally defined as banks, Greenwood is now exempt from restrictions that generally prohibit interstate banking.
