Citicorp Pushes Card Services With a Contest for Merchants

Citicorp is offering free advertising time to Chicago retailers that promote its Visa and MasterCards in their stores.

The New York banking behemoth is prepared to award $75,000 worth of radio ad time to Chicago retailers for which it processes credit card transactions. To enter the contest, merchants must prominently display Citibank MasterCard and Visa "take one" application boxes in their stores.

Partly designed to lure more cardholders to the bank's massive bank card business, the contest has the larger objective of promoting Citicorp Establishment Services, a unit engaged in the unglamorous but essential task of processing credit card receipts for retailers.

Third-Largest Processor

Citicorp Establishment Services, Melville, N.Y., is the nation's third-largest processor of bank card transactions for retailers. Last year, it handled about $23.3 billion in card sales for 97,000 merchant outlets, according to the Nilson Report, an industry newsletter.

The unit gained a foothold in Chicago last year when it acquired First Chicago Corp.'s merchant processing business. That transaction gave Citicorp relationships with 15,000 midwestern merchants, representing 20,000 outlets and $1.5 billion in card receipts a year.

The latest promotion is designed to demonstrate Citcorp's commitment to serving these new customers, said Bruce M. Weber, head of Citicorp Establishment Services.

"We're not just a New York company. We are a national acquirer," he said. "And our bigness doesn't mean we can't deliver special services." Banks that handle card transactions for retailers are called acquiring institutions.

Chicago is also a major market for Citicorp's consumer banking business, which includes credit cards. In 1984, it bought 43 branches from the failing First Federal Savings and Loan Association.

Citicorp Establishment Services sets Citicorp apart from many of its money-center competitors, which in recent years have sold their merchant processing businesses. Chase Manhattan Corp., Chemical Banking Corp., Manufacturers Hanover Corp., and Security Pacific Corp. have all exited the merchant processing arena to concentrate on the more lucrative card-issuing side of business.

But Citicorp's promotion demonstrates how a large merchant business can be leveraged to boost a bank's issuing business and vice versa. While many firms now in the merchant processing business are nonbank technology companies that do not issue credit cards, Citicorp has about $30 billion in MasterCard and Visa loans outstanding.

Under the promotion, dubbed Little Box/Big Prize, Citicorp Establishment Services will feature 15 winning merchants in its 60-second Citibank MasterCard and Visa radio commercials in Chicago.

[Tabular Data Omitted]

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