Fifth Third-Kroger MasterCard Alliance Amassing Accounts in a 3-State

Fifth Third Bancorp and Kroger Co. have been quietly crossing state lines with their MasterCard, tempting supermarket shoppers in five new cities.

Introduced in 1993 in Dallas and Houston, the program has expanded to Columbus and Toledo in Ohio, Cincinnati, Louisville, Ky., and Nashville, garnering 110,000 accounts along the way.

Over the next few years, Fifth Third expects to add another 400,000 accounts, said Gregory P. Lutz, vice president of consumer lending.

Cardholders earn rebates, redeemable in Kroger stores, by using their cards to purchase Kroger's merchandise. Customers paying with the card can earn a 1% rebate for annual purchases of up to $2,499 and a 2% rebate for annual purchases over $2,499.

The maximum rebate is $500, but so far, most redemptions have been for amounts between $70 and $80, said Mr. Lutz.

The credit card also functions as a frequent-shopper discount card for purchases at Kroger. Cardholders receive Kroger coupons in their monthly credit card statements.

As the partners continue to roll out their credit card in the 24 southern and midwestern states where Kroger has stores, two issues regarding the product remain unresolved.

The first problem involves a bar code on all issued cards. Initially the code was added to give cardholders discounts in addition to the monthly coupons.

The plan calls for scanning the bar code at the checkout counter to determine if a customer is purchasing items that are on sale. But only Fifth Third/Kroger cardholders would be eligible for such discounts.

Mr. Lutz said that Kroger is concerned that since not everyone qualifies for a credit card, it may be unfair to give only some customers a discount.

A spokesman for Kroger declined to comment on the bar code, saying that its possible uses are being discussed.

"The capability (to offer discounts) is out there," said Mr. Lutz, "but the bar code's future is up to Kroger."

In the meantime, the bar code remains inactive.

Fifth Third and Kroger also want to add merchant partners to the program, but none have signed on yet.

The merchants would likely allow cardholders to accrue points toward Kroger rebates.

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