Video movies and postage stamps may not have much in common, but for NationsBank Corp. they can add up to a powerful credit card marketing and processing business. Within the last six months, NationsBank has signed a cobranding deal with Viacom Inc.'s Blockbuster Entertainment Group and a transaction processing contract with the U.S. Postal Service. Excepting the merger agreement between megaprocessors First Data Corp. and First Financial Management Corp., the two NationsBank announcements were the biggest news of this year in credit card circles. I think we've clearly established that we're a major player in the business and that we continue to do things, said Eileen M. Friars, the 45- year-old president of NationsBank Card Services. I think our competitors know we are a leader. It is a bank to watch, definitely, agreed James L. Accomando, president of Accomando Consulting Inc., Fairfield, Conn. NationsBank, the Charlotte, N.C.-based superregional, already ranks among the top 15 issuers (with $5.68 billion of outstandings) and the top 10 acquirers (with more than $8.6 billion of transaction volume and more than 60,000 merchant relationships). It is one of the rare few along with BankAmerica Corp. and Banc One Corp. to have made such a name for itself on both sides of the credit card business. And it intends to stay on top. The Blockbuster and Postal Service deals, because they are national in scope, may hint at another intention of the $184 billion-asset bank: to use its lucrative, well-regarded credit card business as a stepping stone for nationwide expansion of its retail bank. NationsBank has issued 5.4 million cards, about half of them outside the bank's core territories in the Southeast and Texas. Although NationsBank does not report revenue or earnings by line of business, Mr. Accomando said he suspects NationsBank Card Services contributes about 10% to the corporate weal. NationsBank chairman Hugh McColl is talking about taking it from superregional to national status with more states, more territory, and more products, said Mr. Accomando. He added that it would not be surprising to see NationsBank acquire a bank in any market where its card products have good penetration. It could be the Eastern Seaboard, the Northwest, the West anywhere there is a concentration of hub cities, he said. Credit cards is one product that consumers really don't care where they come from. But if you're offering a traditional banking product, you have to have a footprint in that territory. The card business is a key part of our retail banking strategy, said Ms. Friars. Growing the card business is clearly a priority, and it is encouraged and endorsed all the way to the top of the NationsBank corporate hierarchy. Ms. Friars added that the data base assembled on cardholders could be cultivated to build other NationsBank retail businesses outside the Southeast. Meanwhile, Ms. Friars and her team continue to build the card portfolio. And the Blockbuster Visa card is the biggest building block they've got. Although Ms. Friars would share no specific data on the program, she characterized the Blockbuster card as a success and predicted the bank would eventually issue more than a million of the cards. The card was introduced in March with a splash of high-priced television advertising featuring spokesmodel Cindy Crawford. The TV ads have since been replaced by posters and application forms within the more than 4,000 Blockbuster video stores, as well as by direct mail solicitations of Blockbuster customers. NationsBank views the Blockbuster card as just the beginning of what could be a very lucrative partnership with Viacom, the entertainment conglomerate that in addition to Blockbuster owns amusement parks and music stores. I think there are opportunities to do a lot of things with Blockbuster to add to the entertainment value that we provide to the customers, said Ms. Friars. Amusement parks and CD stores have real consumer appeal, which we intend to capitalize on. Blockbuster has the potential to be a phenomenal credit card because of the company that's backing it, said Mr. Accomando. NationsBank proved its innovation and creativity by breaking into the entertainment market with this product. NationsBank also proved its willingness to break the rules when it teamed up with Nabanco, which is No. 1 in merchant processing, and in February won the contract to install and eventually provide processing support for 50,000 card-accepting terminals in 33,000 U.S. post offices. Nabanco, a First Financial Management Corp. subsidiary formally known as National Bancard Corp., reported $74 billion of transaction volume in 1994. Under terms of the three-year, $45.8 million Postal Service contract, potentially the biggest ever in merchant processing, Nabanco will handle all transaction services, while NationsBank will be the relationship manager and banking provider. NationsBank intends to parlay the contract into more work with government agencies. Federal, state, and local governments are discovering that it's very beneficial to take cards, said Ms. Friars. It's a good growth category for us, and we are currently exploring several other deals with the government. She declined for competitive reasons to name any government entity to which NationsBank is talking. NationsBank and Nabanco took their partnership to another level in April when they formed a joint venture, Unified Merchant Services, to provide merchant authorization, processing, and settlement. The venture begins with about $9 billion in annual merchant credit card sales, representing both partners' merchant portfolios in the Southeast and Texas but not including Nabanco's large national accounts. The joint venture is going as planned, said Ms. Friars. We've consolidated our sales forces, and we've got the marketing arm up and running. The two organizations say the economies of scale they achieve by working together will let them offer better deals and better services to merchants. For example, Nabanco is considered a leader in advanced technologies like electronic draft capture and signature capture, and it plans to bring these capabilities to NationsBank merchants. We are very pleased with where we are and what we're doing in Card Services, said Ms. Friars. We've got a mission to grow, and that's what we're doing.

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