CUC International Inc., the credit card enhancement firm, announced that it had signed a cooperative marketing agreement with First Data Resources, the Omaha-based card processing unit of First Data Corp.
As part of a drive to broaden the distribution of its Comp-U-Card services, CUC will rely on First Data as sales agent to small and medium- size financial institutions.
CUC, based in Stamford, Conn., has never before relied on another company to sell its services directly to card issuers.
About 37 million cardholders subscribe to CUC's programs, which include discount shopping, travel, insurance, checking account enhancements, and dining club services. Typically, such programs cost about $50 annually.
In the past CUC has targeted mostly larger banks like Citibank. For many years, CUC managed Citibank's Citidollars loyalty program, which was discontinued last year.
CUC hopes to add three million to five million cardholders through its partnership with First Data Resources.
Under the agreement, the First Data Corp. unit will collect approximately 15% to 20% of the Comp-U-Card membership fees it brings in. The card-issuing bank gets 10% to 15% of the fee and CUC keeps the rest.
"This agreement provides us with a competitive advantage in today's small to midsize credit card processing market," said Aldo Tesi, president of First Data Resources. "By partnering with CUC, we will now be able to provide greater value to our credit cardholders through the breadth of products and services CUC offers."
CUC is spared the cost of using its own sales force to promote its products to the smaller-bank segment, said a CUC spokeswoman.
As part of the agreement, CUC is also to provide servicing for the American Express Credit Card Registry program, which is offered to American Express cardmembers. Previously, First Data Resources handled the servicing of the registry program.
Cardholders who pay a $15 annual fee can report all of their lost or stolen credit cards to American Express, which in turn contacts the customer's creditors based on a list of accounts that is provided by the customer. The service cancels the lost or stolen cards and is responsible for securing replacements.
The registry service can also be used to notify card issuers of a new address.
CUC's relationship with American Express represents another departure from its past methods of providing service enhancements.
Providing back-end support "is not our core business," said the CUC spokeswoman. "The significance of our relationship with American Express is that we have developed a strategic alliance."
Walter A. Forbes, CUC's chairman and chief executive, said its program with First Data Resources and its contract with American Express "demonstrate how efficiently CUC can create new business opportunities by leveraging our existing resources and expertise."
CUC takes in $1 billion in annual revenue. Its record first-quarter earnings of $292.5 million were up 20% from the 1994 quarter.