Fifth Third Bancorp of Cincinnati is planning a joint credit card marketing venture with Kroger Co., the nation's biggest supermarket chain.

Moving outside its midwestern base, Fifth Third will initially issue the cobranded MasterCard in Texas.

The program could eventually spread to all 32 states where Cincinnati-based Kroger has outlets and could result in a dramatic expansion of Fifth Third's $145 million card portfolio. The bank currently solicits cardholders only in Kentucky, Indiana, and., Ohio.

Building Card Usage

"It will be the best credit card in the United States in terms of interest rates, rebates, and coupons," said George Landry, executive vice president of Fifth Third Bank. He declined to disclose the terms.

Cobranded programs are seen as a way to build card usage and balances, because cardholders can earn benefits offered by the bank's partner each time they make a purchase.

The Kroger-fifth Third is expected to offer bonus points toward gifts from a catalog, among other benefits, said David Robertson, president of The Nilson Report, a newsletter published in Oxmard, Calif.

Nilson currently ranks Fifth, Third 66th among bank card issuers in active accounts, but 84th in outstanding loans, which, indicates why it may want to build balances.

Earning Points

The offering also will test a novel way to build customer loyalty to Kroger, which led the supermarket industry with $22 billion in sales last year.

A bar code printed on the Fifth Third card will enable cardholders to accumulate bonus points at Kroger even if they pay with cash.

After each purchase is tallied at the checkout counter, the card would be passed over a scanner to credit the customer's account.

Customers could earn points by using the card elsewhere, but could not use the bar code.

The program plays into the food marketing industry's experimentation with frequentshopper incentives. Kroger is one of several chains that has tested the Vision Value Club, a point-scoring and micromarketing system developed by Advanced Promotion Technologies of Pompano Beach, Fla.

Two other Ohio banks have ties to that company - a unit of PNC Bank Corp. owns a minority stake, and Banc One Corp. signed an agreement last year to issue a cobranded credit card.

Kroger's choice of Fifth Third as its Mastercard issuer "was a logical move, said Kroger spokesman Paul Bemish. "We already had a merchant relationship with the bank."

Enhancing the bank's appeal to Kroger was its ability to process transactions. Fifth Third owns Midwest Payment Systems, a leading processor of electronic funds transfers serving 43 states. Midwest Payment currently handles Kroger's Visa and MasterCard sales.

The card will be offered in Texas first because Kroger his run a promotional store-card program there.

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