Diners Club Cobrands, JCB Targets Acceptance

  Ask most analysts about Diners Club, and they probably would say, "I see their logos everywhere, but I don't know anyone who has one."
  And that is ironic for the granddaddy of the payment card industry, says Ali Raza, executive vice president of Speer & Associates, an Atlanta-based consultancy. "It caters to a niche market, continues to exist and does have some unique features," he says. "They're certainly making a play within the commercial card space."
  Diners spent 2005 as its first year in an alliance with MasterCard. That agreement allows any merchant in the world that accepts MasterCard to also accept Diners Club cobranded cards issued in the United States and Canada. Citigroup reissued Diners Club cards last May and June to use MasterCard numbering and to carry both the Diners and MasterCard logos.
  MasterCard processes Diners purchases in North America, but users still receive Diners Club rewards. The hope is that the arrangement will create more transactions for Diners Club while increasing merchant acceptance and issuance for both card brands.
  Diners recently expanded the features of its Club Rewards program. Now cardholders can redeem points toward Home Depot, Lowe's, Macy's, Restoration Hardware and Sears Roebuck and Co. gift cards. Diners cardholders also can book travel through online travel services, any travel agent or directly with travel providers. Previously, cardholders could use their rewards points for travel only if they used a Club Rewards personal travel consultant.
  JCB USA, meanwhile, spent last year working to increase merchant acceptance of its cards in areas of the United States frequented by Japanese cardholders, particularly Southern California and the San Francisco Bay Area, Hawaii, New York City, Florida and Chicago.
  That meant signing new merchant contracts while paying close attention to existing merchant relationships in those regions, says Thomas Wright, JCB executive vice president and general manager. "Our primary responsibility and our primary purpose here is to expand the acceptance and awareness of JCB," he says. "We know where the Japanese traveler visits, and it behooves us to focus on a limited area because of our limited resources."
  The approximately 1 million JCB-accepting locations in the United States, according to Wright, include Japanese supermarkets, travel-and-entertainment venues, and such high-end national department stores as Saks and Nordstrom. JCB is accepted by 12.4 million merchant locations worldwide.
  Los Angeles-based JCB USA has issued about 25,000 consumer cards domestically, cobranded with Japanese specialty supermarkets in California and Hawaii, Wright says. JCB's worldwide issuance reached 55.1 million in 2005, with most cardholders in Japan.
  Most of JCB's U.S. cardholders are Japanese-Americans or employees of Japanese companies who travel frequently to Japan. "We would very much like to partner with an issuing financial institution in the U.S.," Wright says. "With the changing landscape here, and the Department of Justice ruling [that Visa and MasterCard cannot prohibit members from issuing other card brands], that presents a greater opportunity in the United States."
  The efforts of American issuers to drive more contactless card use also will help Japanese cardholders feel more at home while traveling here, Wright says. In November, JCB agreed with Visa and MasterCard to a common symbol for contactless-enabled terminals.
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