Retailers' and oil companies' proprietary credit card programs, with their 16% share of revolving consumer credit, make a tempting target for expansion-minded commercial bankers, who control 50% of the outstanding loans.

But Payment Systems Inc. is telling its clients to be selective and recognize that a single, blanket marketing strategy aimed at attracting proprietary cardholders is unlikely to work.

There are, in fact, two strategic choices, says the Tampa-based research firm: compete head-to-head, as against any other type of card issuer, for cardholder loyalty; or cooperate through some form of cobranding partnership.

PSI says competition can work if banks go after the store cardholders who tend to have higher transaction volumes.

Cooperative marketing is more problematic. Retail and oil company portfolios are full of inactive and low-volume accounts, PSI vice president Ellen Gray said last week.

Also, proprietary cardholders are generally not completely loyal to a specific store or company, and a cobranded general-purpose card probably would not change their behavior enough to satisfy the marketing partners.

"They divide their spending in many places," Ms. Gray said of store and oil company cardholders. "How do you develop the nonloyal department store customer outside the store?"

Strong Following

Ms. Gray pointed out that the average annual volume on an individual proprietary account is $250, an unprofitable level for banks accustomed to $1,700 per MasterCard or Visa account.

Store cards do have a strong following: PSI said 27% of households use them most often in retail stores, while 26% usually prefer bank cards, Discover, or other general purpose brands. Checks and cash are preferred by 15% and 14%, respectively.

But in department stores, high-volume households - the quarter of the market that runs up at least $500 a month in charges - prefer nonstore over store cards by 45% to 28%.

Ms. Gray said high-volume households are most likely to use general purpose cards in all kinds of stores, and to consolidate household spending on one card. They would be especially responsive to retail-oriented enhancements like extended warranties, rebates, and discounts.

She said there is less to be gained by marketing to households in the high-balance quartile, which carry at least $1,800 in credit per account. Their monthly charge volume is relatively low, they avoid using general purpose cards for routine purchases, and they generally prefer department store cards.

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