First Bank System Inc. is testing a corporate credit card meant to eliminate many of the financial hassles people face when their jobs require them to relocate.
The relocation card, a Visa product, can be used for a variety of expenses, including mortgage closing and house-hunting costs and moving company fees. Once the move is finalized, the card is deactivated.
The Minneapolis-based bank, widely recognized for its innovative approach to the corporate card market - it recently introduced a version for commercial vehicle fleets - appears to be the first to offer a specialized card for relocations.
Jim Baumgartner, senior vice president and general manager of the bank's corporate payment system, said that the idea for the product came from Merck & Co., one of First Bank's corporate card customers.
Since last June, 250 cards have been issued to employees of the pharmaceutical company, based in Whitehouse Station, N.J.
If the Merck program is successful, Mr. Baumgartner said the bank will offer similar cards to its other corporate card customers, some of whom have already expressed interest in the Merck pilot.
Merck also has been fielding questions from companies inquiring about the test.
Antonio Quintos, manager of Merck's relocation program, boasts that the card has reduced the 40,000 invoices the company processed annually for moving-related expenses to 1,000.
Merck's employees are highly satisfied, the company said, because they don't have to use their personal credit cards. In addition, Merck pays the bills directly, instead of asking the employees to lay out the money and then apply for reimbursements.
The relocation card allows an employee to charge up to $10,000 a month and withdraw up to $1,500 in cash advances. The credit line, however, can be extended temporarily for unusually high expenses, like mortgage closing fees.
So far Prudential Home Mortgage, as well as First Bank, accept the relocation card. Merck is negotiating with other mortgage providers as well.
The lender benefits because it is paid within 24 hours, said Mr. Quintos.
The Merck relocation card features the cardholder's name, signature, and Visa logo, but employees do not have to qualify for the card.
There are also certain controls built into the program that prevent employees from abusing the card agreement.
"There are features in the card that allow us to monitor the usage closely and reduce risk," said Mr. Baumgartner.
For example, Merck can choose the merchants or categories of merchants where the card can be accepted.
Mr. Quintos said that only one employee had tried to use the card for something other than moving expenses. In that instance, after the card was rejected at the merchant location, the employee called Merck angrily asking why the company would not pay for his new tattoo.
Merck is given a 60-day grace period in which to pay First Bank. The card does not carry an annual fee and the company receives a portion of the profits generated by card spending after a certain amount has been charged on all of the company's outstanding cards.
Merck and First Bank will also provide cardholders with 10 blank checks to use with merchants who do not accept credit cards. Mr. Quintos estimated that the first checks will be available at the end of April.
In addition, First Bank provides another, separate line of credit to Merck employees.
Mr. Baumgartner explained, for example, that Merck offers some new hires bonuses for joining the company. While the money is immediately available to the new employee, it is secured for a certain period of time - perhaps six months to a year - by the employee's house.
Merck takes a secondary position on the employee's mortgage to protect its investment, which acts to prevent the employee from quitting immediately and walking away with a substantial amount of unearned income.
