Amex Hits Back With A New Card
The Age
Monday April 21, 1997
Sydney
American Express yesterday launched a low-interest card aimed at attracting the banks' MasterCard and Visa card bases.
The new card will operate as a credit card, unlike the traditional Amex charge card, where the full balance has to be paid off monthly.
It will offer a 13.85 per cent interest rate as long as customers make their payments on time, positioning the product as the most competitive in the market, about two percentage points lower than comparable products. A higher interest rate of 15.95 per cent applies if the customer makes more than two late payments in any six-month period.
The card offers up to 55 days' free credit, access to Amex's membership rewards program, which gives one Qantas frequent flyer point per dollar spent, with the $25 annual fee waived if the cardholder spends more than $1500 a year.
Amex's senior vice-president, Mr John Schaap, said the group aimed to "challenge the older players in the market with real competition", claiming the new card was the best deal available in the Australian market.
The new Amex card threatens the dominance of co-branded credit cards issued by the big banks, and in particular ANZ Bank with its Qantas Telstra Visa, and Westpac with its Global Rewards Visa.
Mr Schaap said the card's release was part of an evolutionary process that began 18 months ago with a series of trials and a limited release to existing Amex customers.
He said Amex's high $35,000 income threshold for membership would be lowered to $25,000 for the new product, which was expected to attract 250,000 new customers.
A gold version of the card would eventually be offered, with the prospect of a co-branding deal on the horizon. An additional attraction was the crediting of reward points for customers transferring outstanding balances from other cards to Amex.
Mr Schaap acknowledged that the weakness in Amex's armory was the smaller network of merchants accepting Amex over Visa and MasterCard, but he said the group was increasing the pace of its merchant acquisition strategy, which is operating at three times the level of two years ago.
Amex has been conducting a worldwide campaign to attract banks to issue its cards, often against intense opposition for Visa and MasterCard.
Mr Schaap said negotiations were under way with several Australian banks, but he refused to identify them.
He said the group was also looking to expand by offering processing facilities to other card issuers through its new Asia-Pacific processing centre in Sydney.
© 1997 The Age
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