Don’t Leave Bank Without One, Amex Hopes

In a new attempt to boost its share of the cutthroat credit card business, American Express Co. is asking banks to offer its cards, even though they compete with the banks’ own Visa and MasterCard products.

The request, made Thursday by American Express Chairman Harvey Golub at a credit card conference in Atlanta, took public a campaign the company has been quietly waging for about a year.

The idea received mixed reviews from some large banks and drew fire from Visa.

Charles Walsh, head of Chase Manhattan Corp.’s Cardmembers Service Group, said the nation’s No. 1 bank was not interested.

Walsh said Chase’s Visa and MasterCard programs, which together have $24 billion in outstanding billings, “fully support all of the needs of our customers. We do not see even the slightest opportunity for American Express to address us or our cardholders’ base.”

But John B. McCoy, chairman and chief executive of Banc One, said his Columbus, Ohio-based company has done business with American Express. It has tested an American Express pre-approved credit line for small businesses and sold its credit-processing systems to American Express.

“I have a tendency to listen when they speak,” McCoy said, “and I am reserving judgment until we look at it.”

Golub told the Wall Street Journal that a number of “significant” U.S. banks have said they are interested, although he and the company declined to name them. In a statement, the company listed six banks in Greece, Israel, Portugal, South Africa, Turkey and Venezuela that issue or have agreed to issue American Express cards.

Visa prohibits banks from offering its cards along with American Express or Dean Witter, Discover & Co.’s Discover cards. Under the current rules, any bank that issues American Express cards would have to drop Visa. There is one exception: Visa allows Citicorp to issue both Visa and its own Diners Club cards. MasterCard has no restriction.

McCoy said he may be able to get around the restriction by, for example, issuing an American Express card for business clients but not a competing Visa business card.

By marketing services and the higher fees directly to banks, American Express hopes to spur enough interest among bank executives to prompt Visa to drop its exclusivity requirement.

The proposal was attacked by Visa, which has made American Express a repeated target of its advertising.

“They got religion late and realized it was a product they needed to offer [through banks] in order to survive,” Visa spokeswoman Susan Murdy said. “They’re trying to catch up, but they don’t have the distribution network” that Visa does, she said.

Banks “have built [Visa] to be the strongest brand in the world, and invested in that brand. It is highly unlikely that they would lose sight of the money they’ve invested,” Murdy said.

There was no immediate comment from MasterCard.

American Express is an independent travel and financial services company that in 1958 first issued American Express charge cards. Unlike credit cards, bills must be paid in full monthly. In 1989 it introduced the Optima revolving credit card, on which consumers can pay a minimum monthly balance and an interest fee.

In the early 1990s, the company had problems with delinquent Optima revolving accounts. Those have been largely cleaned off American Express’ books, but American Express has lost market share.

According to the Nilson Report research organization, Visa captured 47% of the dollar volume of credit-card purchases in 1995, up from 43% in 1990, and MasterCard had 27%, up from 26%. But American Express dropped to 18% from 24%.