Charles R. Walsh seems about as upbeat as the snappy TV commercial touting the Shell MasterCard from Chemical Bank.

When the program was launched six weeks ago, Mr. Walsh, the bank's executive vice president of retail card services, predicted it would be one of the most successful cobranded efforts to date.

His confidence has not flagged. Encouraged by the initial consumer response, he said, "We think this bank card product is going to be extremely profitable for us."

But along the way, Mr. Walsh has had to fend off some barbs from industry cynics who say the Chemical-Shell card will be no match for the likes of Household Bank's General Motors card or the AT&T Universal card.

"To say the Shell card will rival GM's, I think, is really farfetched," said Robert B. McKinley, president of RAM Research Corp., Frederick, Md.

Some say Chemical could double its base of 4.5 million accounts with the gas rebate card; others claim the bank will be lucky to add a million.

"This will eventually boost their business," Mr. McKinley said. "They're hungry for cardholders at Chemical. They've been contracting."

Beefing Up Staff

Even if the Shell card does not surpass AT&T's 12 million accounts or GM's five million, Chemical still stands to be a winner because of the additional receivables. One small indicator has been the hiring of hundreds of workers at its Long Island, N.Y., and Matteson, Ill., card operations to handle the new business.

"Chemical spent the last two years hunkering down to merge" with Manufacturers Hanover Corp., said Spencer Nilson, president of The Nilson Report, an Oxnard, Calif.-based newsletter. "This is a sign they're sticking their heads back up."

Mr. Nilson ranked Chemical No. 8 among card issuers at midyear, with $5.8 billion of outstandings. Even though Chemical dropped two places from a year earlier, the outstandings grew 4% and charge volume jumped 13%, to $3.1 billion.

Credit Used for Half of Sales

Shell is the nation's second-largest gasoline marketer, with $9.67 billion in sales, according to Mr. Nilson. Of those sales, 46.7% are done on credit.

Chemical's success in hooking up with a major industrial company bodes well for the bank card industry, Mr. Nilson said, "especially since nonbanks have been active in this area."

Bank cards accounted for 25% of the $42 billion of card spending at U.S. fuel outlets last year, according to The Nilson Report. It predicted the percentage will grow as customers use cash less at the pumps.

Chemical began offering the Shell card on Nov. 1 by direct mail to nine million consumers, including four million holders of Shell's proprietary card. In an unusual move, the bank sent those customers a new Shell MasterCard with their names on it. All they have to do is call and activate it.

National Ad Campaign

At the same time, Shell kicked off a $ 10 million national advertising campaign. A 30-second spot became a fixture on network television. It was complemented by print ads and "take one" application displays at Shell stations.

The oil company anticipates increasing revenue at its pumps by 10%, with customers cashing in on a 3% rebate on Shell gas purchases in the first year.

Cardholders can earn $70 in free Shell gas each year by accumulating 2% rebates on general credit card purchases and a 1% bonus on every Shell gas purchase. After hitting $70, customers continue to earn the 1% bonus.

Shell says customers can save as much as 10% each year on gas purchases. Mr. McKinley says that would amount to three or four cents per gallon.

Payment Options

The Shell MasterCard itemizes each gas purchase on the monthly statement. Customers have the option of paying off those charges in full while revolving the rest of their balances.

For customers who sign up before May 1994 and make six transactions a year, Chemical waives the $20 annual fee. Most customers qualify for an interest rate of prime plus 10.4 points if they apply before May, and prime plus 11.4 after. Low-risk customers may get a 15% rate.

So far, Chemical's tracking suggests the segmented marketing is working without cannibalizing Chemical's own customer base.

But Mr. Walsh does not have attrition on his mind. He has his eye on hitting the million-card milestone, something that GM, AT&T, and Ford Motor Co. each did fairly quickly.

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