Word: expressiveness
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Dates: during 1970-1979
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Most of the new action by card firms is in a long-somnolent field: traveler's checks. American Express has about 65% of the world market, despite recently heating competition. But the check business, argues Visa International President Lee W. Hock, "has changed very little in the past 50 years. It is ripe for innovation...
Diner's Club is offering checks through an arrangement with Thomas Cook & Sons; they are free, while American Express charges $1 per $100 in checks. Master Charge plans to begin selling traveler's checks, probably by late next year, and will allow them to be charged on its card. Visa is also considering a traveler's check venture...
...lure of the card business, and the reason that the newcomers are prepared to sell checks without a fee, lies in the "float"-all that money from checks that have been bought but not yet cashed. The check issuer has free use of the funds. Thus American Express's pitchman, Karl Maiden, urges returning vacationers to keep their unspent checks in their pockets as "emergency money"-and his campaign is working nicely. Although no firm returns are in yet on the Maiden campaign, American Express studies indicate that people already keep approximately $1 billion in cash stashed away...
Outwardly, American Express shows no sign of concern about the increased competition ahead. Louis Gerstner, head of the company's card division, says he is "respectful" of some of his rivals, especially Diner's Club, but is skeptical about the bank cards that want to add traveler's checks. The business, he says, "may look simple, but it is very, very complex, requiring significant economies of scale and control that take years to develop." Yet many industry analysts believe American Express is facing some tough problems: while there is less and less room for it to grow...
...competition will further blur the marketing lines between the older travel-and-entertainment cards like American Express, which grew up specializing in hotels, airlines, rental cars and restaurants, and the bank cards that originally focused on local retail purchases. Citicorp and other big banks that have been moving into cards and checks on a nationwide scale argue that they have been forced to do so in self-defense, claiming they have lost a lot of consumer credit business since World War II to other loan suppliers, including not only the card firms but department-store charge accounts and the auto...