Citi Will Begin Issuing Credit Cards on AmEx’s Network By Month’s End

In a move that has been expected for more than a year, Citigroup Inc.'s Citibank unit announced today it will begin issuing cards on the American Express Co. network by the end of the month. The full offering, which includes five cards with varying benefits, will be available by mid-January. “By issuing some of our most popular card products on the American Express network, we're offering customers many of the features and benefits they want in a credit card,” said Vik Atal, chairman and chief executive of Citi Cards North America, in a statement. The so-called suite of Citi-AmEx cards will include a Citi Platinum American Express card, a Citi Dividend American Express card, a Citi AAdvantage American Express card, a Citi PremierPass American Express card, and a Citi Diamond Preferred Rewards American Express card. Programs vary, but each card offers points or airline miles tied to purchases. AmEx announced last December that it had reached an agreement with Citibank to issue cards on its U.S. acceptance network (Digital Transactions News, Dec. 14, 2004). The New York-based T&E giant, which has been cobranding with banks overseas for years, has been courting banks to issue on its U.S. network ever since a U.S. Supreme Court decision in October 2004 let stand a lower-court ruling against a ban Visa USA and MasterCard International had maintained against issuance by members on either the AmEx or Discover Financial Services Inc. network. Typically in these deals, all issuance and risk management is left to the banks, while AmEx processes transactions on its merchant network. AmEx's pursuit of this business, however, is somewhat complicated by a lawsuit if filed in November 2004 against the bank card associations and eight major banks, alleging they had unfairly restricted the company from competing in the card market (Digital Transactions News, Nov. 19, 2004). The suit, which followed the Supreme Court decision, did not name Citi. MBNA Corp., which is being acquired by Bank of America Corp., late last year became the first issuer of bank cards to issue cards branded by AmEx.