American Express Co. sees a gold mine in the transaction data it collects on cardholder spending patterns.

For the past six months, the card giant has been testing two merchant programs designed to reward customer loyalty and generate incremental fees.

One program, Express Rewards, provides automatic discounts at the cash register, while the other, Custom Extras, alerts cardholders to savings from particular merchants on their monthly statements.

Wooing merchants with card transaction data is gaining momentum.

American Express spotted the opportunity in 1993 when it launched a merchant rewards program in the United Kingdom. Since then the U.S. bank card community has followed suit, with its version of merchant rewards.

New technology that permits more practical and efficient use of transactional information has made it more appealing, said Frank Caruana, a credit card consultant with Danielian Consulting Group, "but it has not been leveraged near its potential."

Last year a group of 20 banks joined forces to form a limited partnership called USA Value Exchange, which incorporates the credit card transaction information captured by card processor First Data Corp.

"It is powerful information for a merchant," said Mr. Caruana, who worked for Advanta Corp., one of the founding partners of USA Value Exchange.

American Express will roll out Express Rewards in April. Since October, 30 merchants across the United States have been flagging their preferred customers at the point of sale, telling them that they qualify for some kind of reward.

John Eichholz, senior manager for Express Rewards, declined to identify the participating merchants, but he described them as catering to the high- end market.

The program allows merchants to set the criteria for defining a preferred customer. They may choose to base it on how much or how frequently a customer spends in their shop.

For example, a restaurant may ask American Express to alert it when an American Express cardholder has dined at the restaurant three times.

When the merchant swipes the customer's card to get authorization for the transaction, American Express will send back a message over the card terminal indicating that the customer is "preferred." The merchant then delivers its reward.

American Express charges merchants a one-time fee for the service as well as a fee based on the number of cards the merchant targets.

Cardholders began seeing discounts on their statements last year when the Custom Extras program began. This program also got started in the United Kingdom. For the first time this year, it will allow merchants to influence their customers' future spending, said American Express spokeswoman Emily Porter.

American Express tracks how frequently a cardholder shops at a particular store, and can therefore alert cardholders on merchants' behalf- informing them, for example, that the third time they purchase something at the store they will get a 15% discount.

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