St. Louis-based Mercantile Bank will announce this morning the termination of its co-branded VISA program with Southwestern Bell. The eighteen month old program failed to meet the goals of both partners, becoming too expensive to maintain as a result of recent shifts in the industry. For Mercantile the higher-than-average number of transactors, or convenience only cardholders, failed to produce acceptable levels of interest income. As a matter of fact Mercantile announced in March the Southwestern program reduced the banks consolidated earnings by 10-15 cents per share in the first quarter. For Southwestern Bell the program fell short in rewarding its best customers. In previous efforts to save the program both parties tested annual fees and rebate program adjustments without success. Mercantile is replacing the program with a new program called the MercRewards VISA and will begin notifying its 500,000 current Southwestern Bell VISA cardholders today of the programs termination and the option to accept the new VISA card. Cardholders will also receive a special one-time payment of $20 in addition to accumulated rewards. Southwestern Bell, with a market concentration in TX, MO, OK, AR and KS, says it will continue to develop rewards programs for its customers and has not ruled out the possibility of doing another co-branded credit card program in the future.
Mercantile Bancorporation Inc. (NYSE: MTL) today announced that it has ended its co-branded credit card program with Southwestern Bell. The Southwestern Bell Visa card will be replaced by Mercantile’s new MercRewards Visa card beginning in January of 1997.
The MercRewards Visa card will continue to offer cash rewards on general purchases of up to two percent, a primary feature of the Southwestern Bell Visa card. In addition, Mercantile will provide a five percent cash back reward on finance charges to selected cardholders that borrow on their credit line and are not delinquent on their monthly payments. An annual fee may be imposed in certain cases based upon credit utilization. The introduction of the new MercRewards Visa card will allow Mercantile to provide one of the most competitive products in the industry to a wide customer base throughout the Midwest, while improving shareholder returns.
The 500,000 current Southwestern Bell Visa cardholders are being notified by letter regarding the changes to the card. Mercantile will automatically send new MercRewards Visa cards to those who want to continue with the program. Until the new cards are received, on or before the end of March 1997, cardholders may continue to use their Southwestern Bell Visa.
As a result of these changes, the December 1996 telephone and cellular bills will be the final charges eligible for the current five percent phone reward. In appreciation for their participation in the Southwestern Bell Visa phone rewards program, cardholders will receive a one-time SPECIAL PAYMENT of $20 in addition to all accumulated rewards. This SPECIAL PAYMENT will be awarded to those cardholders who have accumulated phone rewards and continue to charge telephone and/or cellular bills through December 1996.
Mercantile Bancorporation Inc., an $18.2 billion multi-bank holding company headquartered in St. Louis, operates banks in Missouri, Kansas, Iowa, Illinois and Arkansas. Mercantile currently has mergers pending with the $3.1 billion asset Mark Twain Bancshares, Inc., with offices in St. Louis, Springfield and Kansas City, and with Regional Bancshares Inc., in Madison County, Illinois. Mercantile’s non-banking subsidiaries include companies providing brokerage services, asset-based lending, investment advisory services, leasing services and credit life insurance.