America Online, Inc. (NYSE: AOL) and First USA, the largest Visa and MasterCard lender in the U.S., announced on Wednesday a five-year $500 million (US$) agreement, reported to be the Internet’s largest advertising and marketing partnership to date. First USA is a subsidiary of Chicago-based Bank One Corporation, which is the nation’s fifth-largest bank holding company, with assets of more than $260 billion.
The companies already have a track record of cooperation, with the co-branded AOL Visa card, established in 1996. This new deal now positions First USA as the exclusive marketer of credit card products and services on AOL, the CompuServe service, AOL.com and AOL Instant Messenger in the United States and Canada.
The deal is expected to generate up to $500 million, according to the companies’ estimates, but also contains significant guaranteed revenue for AOL and marketing commitments to First USA.
This agreement offers AOL the ability to not only cash in on its expanding e-commerce operations, but also to profit additionally from each online transaction that is conducted using the FirstUSA/AOL co-branded credit card in an AOL-based online store. In fact, the companies have already indicated their emphasis on e-commerce transactions by including online shopping guarantees against Internet credit card fraud, as incentive for AOL members to apply for the new card.
This new deal with AOL is a continuation of First USA’s strategic focus on e-commerce transactions. The company has introduced the e.Card Visa targeted specifically at online shoppers, offering 5% cash back for all purchases made with the e.Card at participating online stores like Amazon.com, eToys, Reel.com and others. This latest agreement with AOL will certainly increase First USA’s e-commerce market share to significant proportions.
According to Richard Vague, chairman and CEO, First USA, “Our new and expanded relationship with AOL evidences our continued commitment to the Internet as an effective marketing channel. This marketing relationship better positions First USA to capitalize on the full power of the Internet channel.”
What AOL Subscribers Get
The companies outlined the benefits available to AOL’s 15 million subscribers as a result of this latest agreement:
No annual fee, 3.9% introductory interest rate and one of the lowest Annual Percentage Rates (9.99% fixed APR) in the market for a co-branded reward program;
The option of applying for co-branded First USA products and services online;
Instant online application and instant credit and approval notification for those who qualify;
The opportunity to earn AOL co-branded card reward points;
The immediate option to transfer balances online from another credit card with no balance transfer fees;
Online customer service: The ability to view previous bills online, print account summaries, view charges, and receive balance updates; a 24 hour online statement access and online bill payment option; E-mail customer service as well as 24/7 telephone support; and the ability to change address and contact telephone numbers, and request increased credit limits and the issuing of additional credit cards; and
An online shopping guarantee against unauthorized charges.