JCB Expands, Diners Sees a Travel Revival

  Apart from American Express, the world's two other major travel-and-entertainment cards remain Japan's JCB and Diners Club. JCB is continuing its worldwide expansion, while Diners Club, whose Citigroup Inc.-owned U.S. operation is headquartered in Chicago, remains as low key as ever but looks forward to a travel revival.
  "China is one of the most important markets for JCB in the light of the market potentially," Kazunori Toma, JCB Co. Ltd.'s senior vice president and head of planning, said in an e-mail from Tokyo, where JCB is headquartered. "JCB is (in) negotiation with Chinese banks to license JCB card-issuing programs." He didn't offer further details.
  China represents the future, but JCB says it did well last year despite the economic problems that continue to beset Japan and much of the rest of the world. Toma says the issuer's charge volume increased in fiscal 2003, but he would not give a figure because the company does not officially release its volume numbers until June. In fiscal 2003, JCB had 49.6 million cardholders worldwide, up 9% from 45.3 million in fiscal 2002. The issuer has 3.53 million cardholders in 17 countries and territories outside Japan, Toma says.
  JCB is continuing its aggressive campaign to expand its merchant base. The company has added nearly one million locations in the past year, an increase of 9%, bringing its worldwide total to 11.42 million locations. Outside Japan, JCB has 5.9 million merchant locations. Some of JCB's new merchants include Abercrombie & Fitch, Best Buy, Tommy Bahama, Fairfield Inn and Spring Hill Suites.
  Turkey, the gateway to both Europe and Asia, is the focus of JCB's most recent merchant expansion. JCB International Co. Ltd., JCB's international arm, expects the number of merchants that accept its card in Turkey to increase by more than 100,000 under a recent deal in which its direct licensee, Anadolu Kredi Karti, signed a sublicensing agreement with Turkiye_Bankasi, a major acquirer. JCB targeted Turkey because it is a popular destination for cardholders.
  Similarly, JCB announced in 2003 that its card soon will debut in Peru because more Japanese businessmen and tourists are visiting the South American country.
  As it expands its merchant base, JCB continues to experiment with new technology. The issuer recently announced that it is piloting a contact and contactless credit card at Japan's Ministry of Economy, Trade and Industry (METI). The so-called e-METI JCB Business Card's dual-interface technology enables METI employees to buy products at METI's canteen by holding the card near the surface of a card reader. Away from METI, employees can use e-METI as a regular credit card.
  Meanwhile, based on recent results, Diners Club North America believes that travel is reviving after its recession and terrorism-induced slump, a hopeful sign for a card that some industry sources believe not growing as fast as its competitors. (Diners would not make anyone available for interviews.)
  "The most important trend we see is that travel is making a comeback," Gerald Smith, Diners Club's senior vice president of commercial relationship management, said in a statement. "More travelers are taking more trips, at a higher average cost per trip. This trend was strong in first-quarter '04 and is expected to continue to be strong throughout the year."
  As a result, Diners foresees more interest in its Club Rewards program. "When general travel is down, we see decreased travel (redemptions) in the Club Rewards program and an increase in other options, such as merchandise, gift certificates or other types of unique rewards," Ashley Miller, vice president of Diners Club North America Club Rewards, said in a statement. "Now that travel is on the rise again, card members are taking advantage of the great deals currently available with our custom travel planning and booking service."
  Miller also sees a growing cardholder affinity for "experiential" rewards such as wine tastings and sessions with personal chefs and personal trainers.