By Weiner, Lisabeth; Weinstein, Mike
American Banker , Vol. 150
Discover -- that's the name of Sears, Roebuck and Co.'s universal credit card, which will be introduced in a pilot program in metropolitan Atlanta this fall.
To provide cardholders with cash, Sears said it plans to join anautomated teller machine network. Edward A. Brennan, Sears' president and chief operating officer, said it is Sears' intention to become part of a shared national ATM network rather than establishing its own machine, which would be very expensive to do.
Many details about the card are still vague. In a presentation to securities analysts Wednesday, Mr. Brennan said the fee structure to both the cardholder members and the merchants will be competitive.
Mr. Brennan said that an active sales program to involve merchants in the Discover card is under way, but specific names were not available.
As previously announced, the issuer of the card will be Sears' recently acquired bank, the Greenwood Trust Co. in Delaware. Other participants will be the Sears Savings Bank, Allstate insurance Co., and Coldwell Banker.
Mr. Brennan said research indicates that merchants will be willing to accept the Sears credit card because of the size of the company's customer base and because of the new business it will bring in.
Sixty million individuals carry the existing Sears credit card. There are 27.8 million active cardholders. Receivables from its existing credit card total $12 billion.
"Consumers," Mr. Brennan said, "will be attracted because Discover card will help them save -- as well as spend and invest. This three-pronged approach is essential to the establishment of relationships that will serve the changing needs of our customers. It's a way of helping their assets grow -- not simply pushing product," he added.
Other benefits of the card will be a family savings account with tiered rates increasing with account balances, automated teller machine access, a variety of merchant-related discount programs, and Dean Witter Reynolds financial services, with no setup fees for self-directed individual retirement accounts.
It will also offer a line of revolving credit, emergency cash, check cashing, and lost or stolen card protection.
The savings account and line of credit will be kept separate. When customers charge purchases on the Discover card, they will get a bill for the purchases. Sears will not take funds out of the cardholder's savings account for those charges.
Cardholders will be able to make deposits to their Discover card savings though the mail. When asked if deposits could be made at Dean Witter offices, which are located in Sears stores around the country, Sears' spokeswoman said, "I wouldn't want to talk about that. …