American Express Co. has formed a company in Japan with three other card issuers to expand its merchant network.
The joint venture, called Nippon Card Business Co., will be staffed with salespeople representing American Express, DC Card, Million Card, and Nihon Diners Club to sign up merchants for card acceptance.
DC Card, affiliated with Bank of Tokyo-Mitsubishi Ltd., is the fourth- largest bank card issuer in the Asia-Pacific region, and Million Card, affiliated with Tokai Bank, is the fifth-largest. Each partner owns 25% of the new company.
American Express said Nippon Card Business would complement its existing sales force in Japan, which focuses primarily on multinational accounts. The venture also underscores American Express' global initiative in forging alliances with banks.
While competitors' collaborating through independent sales organizations to sign up merchants is not unusual in the U.S. market, the practice is rare in many markets abroad, said John C. Elliott, president and general manager of American Express international establishment services group.
"Our joint venture consolidates the sales activity for American Express and the other companies into one salesperson," said Mr. Elliott, former chairman and chief executive officer of the merchant processor Card Establishment Services. Mr. Elliot joined American Express less than a year ago.
American Express, which measures its merchant penetration in terms of overall spending, said Japanese merchants that accept American Express cards represent 75% of consumer spending. Nippon Card Business is expected to boost this penetration figure to about 90%, said Mr. Elliott.
Nearly 80% of the 179 million cards in the Asia-Pacific region are Visa or MasterCard cards, which generate 73% of the transaction volume, according to The Nilson Report, an industry newsletter published in Oxnard, Calif. American Express is hoping to narrow this gap, but Nippon Card Business targets merchants in Japan only.
Though Citicorp owns Diners Club Inc., which is run as a franchise operation abroad, Mr. Elliott said Citicorp had little if anything to do with its subsidiary's participation in the venture. Nihon Diners Club is primarily owned by Fuji Bank and Japan Travel Bureau.
