A major credit card bank has decided to help American Express Co. take pot-shots at MasterCard and Visa.
In perhaps its biggest coup since challenging the card associations' prohibition on co-marketing with competitors, American Express said National Westminster Bank of London will issue two types of American Express cards next year.
One will be a credit card for British consumers.
The other, for medium-size and large corporations, will be marketed in the United States by United Airlines. The cards will be issued by Natwest and serviced by American Express.
The corporate card represents a reentry by Natwest into the U.S. card market. The British banking company sold its U.S. consumer bank, along with a card business, to Fleet Financial Group last May.
The United card deal would not have been possible if Natwest were still part of Visa U.S.A. or MasterCard's U.S. region, subject to their restrictions on offering American Express or Discover cards.
Patrick Boylan, Natwest's managing director for card services, said at a press conference that Visa's and MasterCard's rules do not prevent a European member from issuing American Express cards in the U.S.
"Anything we can do to let banks understand they can work with us, while working with Visa and MasterCard at the same time, is a good thing," Jonathan S. Linen, vice chairman of American Express, said in an interview.
The United card will have the airline's logo and American Express' on the front and Natwest's on the back. It will be accepted by merchants in the American Express network. The partners said they hope to expand the product beyond U.S. borders over time.
United continues to offer individuals the MileagePlus Visa card, issued by a unit of First Chicago NBD Corp.
American Express, the dominant issuer of corporate charge cards, sees no synergies between its products and the new United card, Mr. Linen said. In fact, the products will compete against each other.
"If we can't get these customers ourselves, we would be glad to have gotten them through United Airlines as opposed to a third party getting them," said Mr. Linen.
"Natwest is partnering with a very prestigious brand in an area in which American Express is a leader," said William Keenan, a consultant who was formerly senior vice president of consumer loans for Natwest Bank in the United States.
Mr. Keenan said he believes the deal gives Natwest the potential to build a card presence without having to invest a lot of its own money.
Similarly, American Express will piggyback on Natwest's powerful brand name in the United Kingdom. Natwest is one of that country's top three commercial banks, but Amex lags there in card market share.
Mark Sievewright, managing director of PSI International, the London arm of Florida-based Payment Systems Inc., said he expects other banks in Europe to follow Natwest's lead and take advantage of an array of products American Express is designing.
Mr. Boylan of Natwest said he is not worried that his bank will be sued by MasterCard and Visa, as Advanta Corp. was after announcing a joint marketing effort last month with American Express.
Like Advanta, Natwest did not inform the card associations prior to its announcement of its plans to work with American Express, and like Advanta, Natwest said it does not believe it is violating the associations' rules.
"The outcome of the Advanta lawsuit is going to be a watershed for the card industry," said John F. Mullady, the former managing director of Advanta's U.K. operation, who is now a New York-based consultant.
Mr. Mullady said the card industry is watching intently to see whether Advanta can maintain its relationship with American Express.
In the meantime, American Express believes it has found a way to "crack the U.S. market," said Mr. Linen.
