NationsBank Corp. has been offering commercial cards to cash management customers and government entities for more than a decade. The profile of the business and NationsBank's aim are both much higher.

A new commercial card system it developed has helped capture large contracts from such federal departments as Defense, Interior, and Transportation - and it is now being introduced to the private sector.

NationsBank says it is Visa U.S.A.'s fastest-growing corporate card issuer and second in size only to U.S. Bancorp. NationsBank also issues a corporate MasterCard, an option that the Department of the Interior has chosen.

NationsBank executives said they predicted two years ago that commercial cards would be big and only a few companies would dominate.

"We really wanted to be one of the largest and most successful corporate card issuers," said Scott Collary, senior vice president of government and commercial card products.

The upshot was Eagls, the Electronic Account Government Ledger System. It lets agencies set up and maintain card accounts on-line, purchase goods electronically, and look at 13 months of back data.

Corporations or government agencies can get one type of card - purchasing, for example - or two or three types. They can get fleet, purchasing, and travel and entertainment functions on one card, administered centrally through Eagls.

NationsBank is one of the five companies authorized by the General Services Administration to bid for government commercial card business. It, Citicorp, U.S. Bancorp, and First Chicago NBD Corp. have been the biggest winners - and Mellon Bank Corp. a lesser one - of the agency contracts that take effect Dec. 1.

"NationsBank is certainly one of the lead issuers of commercial cards, but I'm not aware of anything very different that they are doing," said David K. Hillman, a credit card consultant with Deloitte & Touche Consulting Group, Parsippany, N.J. "It is a commodity product and must be priced pretty aggressively."

American Express Co., another authorized federal bidder, withdrew from contention, saying profits were insufficient. But the bank competitors are still actively wooing the undecided.

NationsBank wants to "generate enough volume to help us pay for the tens of millions of dollars of investment we were making in electronic marketplace products," Mr. Collary said. The investment was a foundation for "broadening the market and offering it to our corporate customers as well."

As of early August, NationsBank had won federal contracts representing $3 billion a year in transaction volume. Those contracts, Mr. Collary said, represented "probably half of our large corporate business," but there were "a lot of other agencies that haven't committed yet."

The business unit that Mr. Collary has run for a year and a half would grow further through NationsBank's merger with BankAmerica Corp., which on its own failed to make the cut for the government business.

"When you look at putting the two together, you end up at a place that's better than either one of us could have been at individually," Mr. Collary said. "The merger quickens the pace of our ability to deliver even greater products and more resources to the market."

Jeff Rankin, NationsBank's senior vice president in charge of nongovernment commercial cards, said that as the merging units "started the discovery process, we found ourselves having more in common than we do gaps and differences. As we come together, it will be much easier to integrate and move forward because of the commitment both companies have to the business."

To NationsBank, the federal contracts are simply showpieces for a multifaceted card enterprise that has been growing for awhile. As one of the primary banks for the U.S. Postal Service, NationsBank provides point- of-sale processing and has begun a pilot of a private-label card that post offices give to bulk mailers.

The Treasury Department relies on NationsBank as a merchant processor and as issuer of the Uncle Sam interagency acquisition card. Florida, Georgia, Maryland, and South Carolina rely exclusively on NationsBank for purchasing cards, and Florida has signed up for the Voyager fleet card.

NationsBank has issued "hundreds of thousands" of smart cards, Mr. Collary said. Among them are 40,000 to recruits at Lackland Air Force Base in San Antonio, and 48,000 at Department of Veterans Affairs hospitals in the Bronx, N.Y., and Tampa.

Mr. Collary, 34, began his career 11 years ago in consumer lending at Sovran Bank, which became part of NationsBank by acquisition. He entered the credit cards group in 1992, working on retail card marketing and cobranding programs. He helped with the card unit's transition during NationsBank's acquisition of Boatmen's Bancshares and from there moved into his current "government job."

Mr. Rankin, 42, joined NationsBank from Boatmen's, where he was chief operating officer in the merchant processing unit. He previously had managed both a cardholder and a merchant portfolio for Banc One Corp. in Indiana.

"In some cases, our (business) customers are well ahead of what the government is going to do," Mr. Rankin said. "Other companies are on the fence or waiting to see what's going to happen, and the government will help spur them into action."

Mr. Collary noted that the commercial arena is "much younger, less penetrated, and probably less confused" than the retail card market today, and thus offers "a lot of opportunity."

The entry costs are high and Mr. Rankin said NationsBank's planning two years ago accounts for today's advantages. Companies that got in early, he said, "were going to have a better chance of gaining the market share." n

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