In a turnabout especially gratifying to American Express Co., a restaurant that was featured in Visa U.S.A. advertising has begun taking the American Express card.

The Boston-area establishment, Rosalie's, gained national attention in 1986, when it was the first to be featured in a series of Visa U.S.A. ads spotlighting merchants that "don't take American Express."

That campaign was instrumental in Visa's effort to be perceived as the No. I card in the prestigious travel-and-entertainment segment long dominated by American Express. It also helped Visa distinguish its strategy from that of the rival bank card association, MasterCard International.

Restaurateur Rosalie Harrington said she can't afford to play favorites any more. Now the restaurant that gained fame for not taking American Express is poised for another turn in the limelight for changing its mind.

"Customers were asking to use the American Express card, and I didn't want to lose business," Ms. Harrington said. "It was a smart business decision to take the card, and we already can see a big difference in the bottom line."

Ms. Harrington said it is too soon to provide any concrete results. She added that the prospect of an "attractive advertising campaign" dangled by American Express was a big factor in her change of heart.

"Her decision to accept American Express is symbolic of our efforts in winning back merchants," said an American Express spokesman.

Reeling from a protest by merchants -- centered in Massachusetts -- against its premium pricing, American Express retaliated two years ago with discounts to merchants that automated their transaction processing. The company also lowered -- to $500,000 from $1 million -- the minimum annual charge volume for merchants to qualify for cooperative marketing funds.

Big Spenders

An advertising campaign in the restaurant trade press currently targets Visa-accepting restaurants.

American Express argues that restaurants lose revenue by refusing to accept its cards, because Amex holders tend to spend more than bank card users.

The marketing push is reportedly paying off. American Express signed up 50,000 new merchants in the first seven months of 1993.

Visa isn't about to give up the anti-American Express campaign after one high-profile defeat.

"You win a few, you lose a few," said Visa U.S.A. president H. Robert Heller. Visa officials fondly point out that the association leads by a wide margin in merchant acceptance, with 10.4 million locations compared with American Express' 3.4 million worldwide.

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