Only a month after the Supreme Court decision that cleared the way for American Express Co. to collaborate with bank card issuers, the company's partnership with MBNA Corp. is bearing fruit.
On Friday the companies said that MBNA has issued 300,000 Amex cards and signed up 1,000 affinity groups to market them.
In an interview, Bruce L. Hammonds, the president and chief executive of MBNA, said his customer service representatives have found the cards "a very easy sell." Last month, at a meeting of one MBNA affinity group, a California aircraft owners' association, the card got "a great reception," he said.
In the same interview, Kenneth I. Chenault, the chairman and CEO of American Express, called the partnership "transformational" and the beginning of big changes in the credit card business.
"The best analogy is the breakup of AT&T," he said. "What you saw was tremendous innovation." He predicted "intense competition between American Express, Visa, and MasterCard for banks' business."
"Consumers will benefit because of a major push to innovate," Mr. Chenault said.
Mr. Hammonds would not say how many Amex cards he hopes for MBNA to issue, or how much money he expects his company to earn from the deal. "We are not making projections, but 300,000 in just a few short weeks shows the customer reception," he said.
That is about the number of cards a top-50 bank issuer would have outstanding, according to Tony Hayes, a managing director in the financial services practice of Boston's Dove Consulting Inc.
However, analysts cautioned that the early results were not proof of success.
"It represents a promising start, but it is very early to extrapolate anything off of four weeks of marketing," said Michael D. Cohen, an analyst with Susquehanna Financial Group LLP.
(In one of the biggest card launches ever, Household International Inc. in 1992 signed up 3 million cardholders in around three months for the GM Card, according to CardWeb.com, a Frederick, Md. research firm.)
On Oct. 4 the Supreme Court declined to hear an appeal of a decision that struck down Visa's and MasterCard's rules that prohibited their member banks from issuing cards on other payment networks.
The timing was fortuitous for MBNA, which analysts have said is less diversified than its rival Capital One Financial Corp. and has had a hard time expanding this year.
MBNA posted record third-quarter profits, but some analysts were disappointed by sluggish growth in its managed loans, which rose 4.5% from a year earlier but dropped 0.34% from the second quarter to $117.8 billion.
Mr. Hammonds said that American Express has promised that the cards will help MBNA bring in more revenue from big-spending customers, and they are the ones who are being offered the new cards.
Those are also the customers "who have a real affinity for the American Express brand" and are therefore more likely to sign up for Amex cards, he said, and some new prospects are being courted.
American Express generally charges merchants higher fees than Visa U.S.A. or MasterCard International, both of which raised their interchange rates in April. That is why issuing Amex cards could be lucrative for the banks, which get a cut of the fees.
Mr. Hammonds said that American Express had helped it set up some deals to encourage consumer spending, including discounts for using MBNA's Amex card at particular merchants. Such arrangements, he said, are not a common feature of MBNA's Visa and MasterCard products.
MBNA offered such merchant deals "a little bit" with Visa and MasterCard, he said, "but it is more available [through] a broader array of players" with Amex.
"There are specific things only MBNA will be able to access within American Express' merchant network, and that is new to us." (Amex has said it is looking for other bank partners, however.)
Mr. Hammonds said MBNA was preparing a booklet to mail to its new Amex customers offering more than 200 merchant discounts and other perks for using the card.
"Any help we asked, American Express has been extremely responsive," Mr. Hammonds said.
He said his company has been offering to let customers switch or take an Amex card in addition to their current Visa- or MasterCard-branded ones. Mr. Hammonds said MBNA is also planning more Amex products, including one that will carry an annual fee and offer Amex platinum-type benefits such as companion airline tickets and airport lounge access.
As to whether he worries about issuing so many cards with a competitor with which he has no board representation, he replied, "We are not on Visa's board either." (Lance L. Weaver, an MBNA vice chairman, sits on MasterCard's board.)
Mr. Chenault compared the partnership to alliances between tech firms that are also rivals. "The technology industry has been doing this for decades," he said. "In some cases you partner and in some cases you compete. You need a strong knowledge of who your customers are."
In an interview Friday, Visa's president and CEO, Carl Pascarella, sounded unimpressed by the early results of the MBNA-Amex deal.
"I'm not focusing on what they're doing," he said of American Express. "Our plan is to expand the breadth of our services so we can attack our real competition - cash and checks."
Christopher Theoharides, the president of Advantage Consulting Group in Massapequa, N.Y., said that other issuers are watching MBNA closely but will likely not make their own deals with Amex for at least several months.
"Issuers will wait to see what happens," said Mr. Theoharides, who specializes in cobranded credit card partnerships. "You don't just put something like that in place, you have to build a relationship to make sure everything works right."
Pressure from Visa and MasterCard could slow things down, he said. "There are a lot of considerations, not the least of which is the impact to their existing relationships with MasterCard and Visa," he said. "It is not that simple."
