Provident Bancorp of Cincinnati is expanding its discount card program to Florida.

MeritValu is a customer loyalty program that is expressly not a credit card. The Florida program will operate under a different brand name that has yet to be determined.

A magnetic stripe allows cardholders to rack up discounts in the form of special merchant dollars credited to the card whenever a purchase is made- regardless of payment method. Customers can let the discount credits accumulate, or they can spend them immediately by swiping the card again.

Each time a customer uses the card, the remaining merchant-dollar balance appears on the receipt.

The card also lets Provident compile transaction data that can be sold to participating merchants. Provident maintains the right to market directly to the cardholders.

The program has intrigued many in the credit card industry because it is an example of a regional bank distinguishing itself from larger competitors by marketing a product using data mining techniques.

But some observers wonder whether the program is better for merchants than it is for consumers.

"What's good about it is from the merchant perspective," said Jeffrey Baxter, principal with S.J. Baxter and Associates, Forest Hill, Md. "It gives them an opportunity to capture data about the customer," a capability that tends to be available only to the biggest retailers.

Provident will upgrade the merchant terminals to capture the data.

First Data Corp. Hackensack, N.J., operates a similar, but much larger, program called USA Value Exchange. It uses bank card transaction information to formulate tailored discounts that appear in consumers' monthly credit card statements. Deductions are made automatically at the point of sale when a bank card is used.

"Provident has a niche that First Data won't go after-the smaller merchant," Mr. Baxter said. "I doubt Wal-Mart would sign up for this."

MeritValu is a "closed-loop" system, in which customer rebates are compiled electronically. Customers can use cash, check, credit cards, or debit cards for purchases, but must swipe the card through the terminal at the point of sale if they wish to qualify for a discount.

Mr. Baxter said one potential drawback is that the consumers must carry one more card in their wallets and must remember to use it every time they make a purchase at affiliated stores.

"People are starting to say we are an awful lot like the closed-loop Discover system," said Roland E. Koch, senior vice president and chief operations officer, Provident Bank. "We will be the issuer, the transaction acquirer, and the service provider."

For the expanded program, Provident is working with the chambers of commerce of Greater Fort Lauderdale, Greater Miami, and Greater Boca Raton.

The card will be marketed through Valu Card, a partnership of the Greater Fort Lauderdale Chamber of Commerce and Noblett and Associates Inc., a consultancy based in that city.

Provident Bank, the lead subsidiary of $7 billion-asset Provident Bancorp, hopes to issue the card initially to the 350,000 employees of merchants that belong to the three chambers of commerce.

The MeritValu program was rolled out last summer in Cincinnati and has 70 merchants and 300,000 cardholders. Ultimately, the bank plans to take the program national.

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