Merrill Lynch & Co. is promoting a small-business debit card that offers discounts for hotels, airlines, and franchise restaurants.

For a $75 annual fee, business owners get five Visa cards for employees to use for expenses. Entrepreneurs can set individual spending limits for each cardholder.

Unlike typical bank debit cards, which instantly subtract purchases from checking accounts, purchases made with the Merrill Lynch Premium Visa Card are deducted on the fourth Wednesday of every month.

This has great appeal for entrepreneurs, consultants said.

A charge card offered by American Express Co. allows holders up to 40 days to pay for purchases, depending on when the purchases are made.

"Most people would want to pay their bill as late as possible,"said Les Dinkin, a consultant with Oliver Wyman & Co., New York.

Small-business debit cards are a relatively new product for banks. Only 44% of the 36 banks surveyed by the Consumer Bankers Association in 1997 offered them.

Chase Manhattan Corp., the ninth-largest bank lender to small businesses, introduced a no-fee debit card this month that instantly deducts purchases from a business owner's checking account. The Chase debit card comes with a $5 coupon off a purchase of more than $25 at Staples office supply stores.

Merrill Lynch's card allows business owners to earn free airplane tickets, free stays at Marriott International's Ritz Carlton and Marriott hotels and discounts on Hertz Corp. rental cars. Entrepreneurs can also use the card to earn gift certificates for Olive Garden restaurants, Barnes & Noble bookstores, and Macy's department stores.

American Express' card grants discounts of 3% to 25% for Hilton Hotels, Hertz rental cars, Kinko's copying, Mobil gasoline, and UPS shipping services.

Although the American Express card offers small businesses a longer payback period, its perks do not stack up as well as Merrill Lynch's card, Mr. Dinkin said.

Merrill Lynch's debit card is "a much more comprehensive card than Amex's," he added.

Merrill Lynch's card also has appeal for business owners who use personal credit cards to collect frequent-flier miles or who use bank cards that do not offer any perks.

Purchases made with the debit card are deducted from a Merrill Lynch Working Capital Management account, a combination investment and interest- bearing checking account.

Consultants are optimistic the new product will be a success. "Merrill is really going after this market in a very focused, effective manner," Mr. Dinkin said.

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