American Express is adding some new features to its year-old corporate purchasing card program in a drive to distinguish its product from competitors.

When the purchasing program was announced this time last year, American Express raised eyebrows, not because the company was entering an area of the card business in which banks had a head start, but because American Express said that it would ask banks to distribute its purchasing card.

While that has not yet happened, John Yates, senior vice president of American Express corporate purchasing services, said that the company expects to reach agreements with a number of large regional banks by the end of the year.

American Express plans to tap into the relationships that these banks have with medium-sized companies in their regions.

"Most of our energies have been focused on large corporate accounts," a strategy that makes perfect sense considering that American Express has relationships with 70% of the Fortune 500 companies through its corporate card program, said Mr. Yates.

Since January 1994, American Express has signed on 259 corporations for its purchasing card program, including companies like IBM, Scott Paper, and Northrop Corp.

The majority of the 259 companies, said Mr. Yates, are also customers of American Express' highly successful corporate card program, launched in 1982. The corporate card program is the leader in the travel and entertainment segment with $34 billion billed to its cards in 1993.

The purchasing card market is estimated to be $300 billion.

The new purchasing card program enhancements include two software systems, a new consulting group that advises companies on how to maximize their purchasing card benefits, and a program that allows companies to restrict how and where the card is used by its employees.

The software systems, PurchasePower and AccountingLink, are designed to allow companies to track spending more efficiently by creating, for example, categories of vendors.

These features will be available to customers by Feb. 1.

American Express is promising its corporate customers in the purchasing card program that it will sign up 90% of the company's vendors or suppliers within 60 days and activate those accounts within an additional 30 days.

So far, 8,000 suppliers are accepting the card, which requires a personal computer terminal versus the standard merchant terminal used in consumer transactions.

However, Mr. Yates said that some smaller companies are using the older terminal.

One area, Mr. Yates believes, that distinguishes American Express' purchasing card program from others is that American Express is aggressively signing on industrial suppliers that traditionally do not accept any form of credit card payment.

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