Magazine article American Banker

American Express Seeks to Mine Its Data on Cardholder Spending Patterns

Magazine article American Banker

American Express Seeks to Mine Its Data on Cardholder Spending Patterns

Article excerpt

American Express Co. sees a gold mine in the transaction data it collects on cardholder spending patterns.

For the past six months, the card giant has been testing two merchant programs designed to reward customer loyalty and generate incremental fees.

One program, Express Rewards, provides automatic discounts at the cash register, while the other, Custom Extras, alerts cardholders to savings from particular merchants on their monthly statements.

Wooing merchants with card transaction data is gaining momentum.

American Express spotted the opportunity in 1993 when it launched a merchant rewards program in the United Kingdom. Since then the U.S. bank card community has followed suit, with its version of merchant rewards.

New technology that permits more practical and efficient use of transactional information has made it more appealing, said Frank Caruana, a credit card consultant with Danielian Consulting Group, "but it has not been leveraged near its potential."

Last year a group of 20 banks joined forces to form a limited partnership called USA Value Exchange, which incorporates the credit card transaction information captured by card processor First Data Corp.

"It is powerful information for a merchant," said Mr. Caruana, who worked for Advanta Corp., one of the founding partners of USA Value Exchange.

American Express will roll out Express Rewards in April. Since October, 30 merchants across the United States have been flagging their preferred customers at the point of sale, telling them that they qualify for some kind of reward. …

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