U.S. credit card companies move onto Net to market
Added: (Wed Nov 24 1999)
Pressbox (Press Release) -
NEW YORK, Nov 23 (Reuters) - U.S. credit card companies like MBNA Corp. (NYSE:KRB - news) and Providian Financial Corp. (NYSE:PVN - news) are moving to the Internet to dig for new customers, hold on to old ones and cut costs, financial analysts said
The basic credit card concept likely will not change much because of the Internet but analysts expect card issuers to intensify their online efforts, in order to generate new accounts, keep customers longer by using online shopping rewards, and reduce back office expenses.
"The companies that have devoted the most resources to an Internet strategy are NextCard, which is virtually 100 percent Internet-oriented, American Express Co. (NYSE:AXP - news) and Providian," Mark Alpert, an analyst at Deutsche Banc Alex. Brown, said. Companies that have explored Internet possibilities and announced some Internet initiatives include Capital One Financial Corp. (NYSE:COF - news), MBNA and Metris Cos. Inc. (NYSE:MXT - news).
The Internet also is breeding new competitors in an already crowded industry, further pushing companies online. So far it has spawned one pure Web-based credit card issuer, NextCard Inc. (NasdaqNM:NXCD - news) which has a joint marketing deal with hugely popular online bookseller Amazon.com (NasdaqNM:AMZN - news) and other online companies.
Among recent Internet-oriented announcements, MBNA, based in New York, has said it expects to acquire 400,000 new customers through its Internet marketing efforts this year. The company said it targets customers according to their online interests and does not mass market by using banner ads across Web sites.
"At the moment the Internet is a marketing channel," Gary Gordon, an industry analyst at PaineWebber, said. "It should become a material marketing channel. You have to believe every issuer will have some effort in the area."
MBNA also recently launched a wallet program, aimed at capturing a greater share of dollars being spent online.
Wallets store a cardholder's personal payment, shipping and purchase information in a secure fashion so that people can fill out forms and make purchases at retailers' Websites quickly and safely.
Bank One Corp.'s (NYSE:ONE - news) First USA arm, a leading U.S. credit card issuer, used the Internet to market its cards although the bank had trouble keeping customers in recent months because of certain policies.
Financial services company American Express Co. (NYSE:AXP - news), viewed by many as an online leader and known for its signature green charge cards, made a big splash with an Internet credit card called 'Blue'. The card has both a traditional magnetic stripe for shopping in stores but also a smart chip that holds personal shipping and account data.
Providian, in San Franciso, has an Internet credit card called Aria Visa, has opened more than 100,000 new accounts since its Website was launched in May at http://www.aria.com.
The Aria Visa's approval process often takes less than 30 seconds, allows user to transfer balances, provides online customer service and has a rewards program, it said. Providian also said it offered customized products, and advertising Aria on television as well as billboards and in print.
This summer, Capital One Financial Corp. (NYSE:COF - news), another card issuer, formed a pact with DoubleClick Inc. (NasdaqNM:DCLK - news) to be the Internet advertising company's preferred credit card partner on DoubleClick's new shopping and services program.
"We expect the company to announce a series of Internet initiatives before year-end," Alpert said in a recent research report on Capital One.