American Express, MNBA join forces to issue credit cards
American Express said MBNA will issue American Express-branded credit cards starting later this year, allowing the company to reach a much larger potential customer base. American Express will also continue to issue its own cards.
No financial terms were disclosed.
The alliance was made possible by a 2001 ruling in an antitrust case brought by the Justice Department.
A federal court in Manhattan ordered Visa and MasterCard to drop rules that prohibited their member banks from also issuing American Express and Discover cards. Legal appeals by Visa and MasterCard have all been rejected.
MBNA already issues Visa and MasterCard credit cards. As a result of the alliance with American Express, it will become the nation's first financial institution to participate in all three major card networks.
MBNA bills itself as the nation's largest independent issuer of credit cards, many of them distributed through professional and university affinity programs.
Shares in both companies closed up yesterday. American Express rose $1.20 to close at $50.95, while MBNA advanced 40 cents to $26.90.
According to data from CardWeb.com, an online publisher of information about payment cards, American Express is the top card issuer by charge volume in the United States, with a 12.4 percent market share at the end of 2003. Citibank is second at 11.7 percent, and MBNA is third at 8.7 percent.
Robert McKinley, chief executive of CardWeb.com, said the alliance of American Express and MBNA would change the industry.
"The fact that American Express could land the No. 2 player in the country is stunning," he said. "It means the landscape will change sooner rather than later."
"The cards will carry the American Express logo and will be accepted on the American Express global merchant network," the company's announcement said. "MBNA will own the loans and will manage and service the accounts on its own systems."
MBNA has affinity or cobranded relationships with more than 5,000 organizations, including professional associations, sports teams, and colleges and universities.
American Express is a diversified travel and financial services company that was founded in 1850. It is best known for its charge cards, which require payment in full each month, and its travelers checks.
In recent years, it has increased issuance of credit cards.
American Express had made it clear since the 2001 court ruling that it was seeking U.S. distributors.