It won't be the last. AmEx is already eyeing other niche markets for growth. Among them: one card for healthcare expenses and another for college students similar to AmEx's existing card for seniors.
The Corporate Purchasing Card, rolling out this month and heading overseas by midyear, allows large companies to reduce paperwork from purchase orders, invoices and checks each time they buy office supplies, equipment and other incidentals.
It's aimed at aggressively expanding AmEx's franchise in the business-to-business arena, where the company already controls 70% to 85% of charge volume on corporate travel and entertainment expenses.
"This expands our definition of our brand beyond our45
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consumer products," said Harvey Golub, AmEx's chairman-ceo. "We're very excited about pioneering a business sector that has little experience in plastic."
The move also signals a renewed vigor at AmEx that, despite an early 1990s downturn and continuing share losses, has seen recent gains in revenue, profit and merchant base. In the third quarter of 1993, the company's 17.7% share was off 1.5 points from the year-ago period.
Under Mr. Golub, AmEx also hasn't been shy about responding to threats from Visa, which since 1986 has made AmEx the target of merciless attacks in ads from BBDO Worldwide, New York.
Visa today starts running a network TV spot featuring Los Angeles chef Wolfgang Puck, who dropped AmEx from his Spago and Granita restaurants last month and signed an agreement to appear in Visa's campaign.
Three days ago, AmEx responded with California newspaper ads headlined "According to Visa, the customer isn't always right." The ads from Ogilvy & Mather, New York, resemble a tactic used in response to Visa's U.S. Open and Telluride Ski Co. spots.
"They're on the offensive again, as opposed to the defensive," said Thomas Facciola, an analyst at S.G. Warburg Securities. "MasterCard and Visa were almost better off letting the sleeping dog lie where it was. They kicked the dog too much and now it's waking up fighting."
Despite overall growth in charge volume, the consumer credit-card market has become intensely competitive, and pressure on interest rates and fees has made profits more difficult to come by. So AmEx and the two major bankcards are pinning their future growth on new, potentially high-volume business sectors.
Payment for small purchases by companies, estimated at $250 billion or more a year, is almost entirely dominated by cumbersome checks and invoices that are expensive to process. Even if cards attract just 20% to 30% of this spending, the revenue potential is enormous.
And despite some inroads by credit cards, doctor and hospital bills are largely paid with paper, not plastic. AmEx last fall began testing Quattro, a cardless medical-payments service for people enrolled in Blue Cross & Blue Shield of New Jersey, after an earlier Boston experiment.
An AmEx official confirmed the company is considering expansion of that program, using a special "healthcare card," that would make AmEx a go-between for doctors, hospitals, patients and insurance companies.
The company is also moving ahead with plans to expand Optima, its revolving credit card, with a major campaign later this year aimed at a broader group than the core base of AmEx charge-card customers it has targeted to date.
Although AmEx's purchasing-card ad budget is small-an estimated $5 million print campaign began last week-the company's total marketing investment is huge. Estimated by Mr. Facciola at $50 million, it will include direct marketing from Ogilvy & Mather Direct aimed at the Fortune 500.
AmEx has 100 employees dedicated solely to the Corporate Purchasing Card and will rely on 400 others in the corporate card sector for other sales efforts. O&M created the campaign, which promises a "revolution" in corporate purchasing. Wunderman Cato Johnson the Corporate Card agency of record, handled media buying.
MasterCard International and Visa USA are readying procurement cards of their own, but some analysts give AmEx the edge.
"The advantage is they control both sides of the transaction," said Moshe Orenbuch of Sanford C. Bernstein & Co. "They can sign up both companies and suppliers. It's a little hard for banks to do that."M
20American Express' new Corporate Purchasing Card enters a niche dominated by cumbersome checks and invoices.
Visa's latest attack on American Express features restaurateur Wolfgang Puck.