Diners Club and JCB are expanding their franchises even as charge volume remains flat or declines, all in the hope of reaping rewards when T&E spending picks up.
  Business travel has been deeply impacted by terrorism, the lead-in to the war in Iraq and a generally soft economy, and those factors dampened 2002 results for card companies in the travel-and-entertainment space.
  Tokyo-based JCB Co. Ltd. took a direct if non-violent hit from terrorism when it canceled its annual meeting set for last November on the Pacific island of Bali. The meeting was scheduled to occur soon after a terrorist bomb went off in a nightclub there, killing as many as 200.
  Diners Club International has seen its worldwide charge volume drop 17% from $35 billion in 2000 to $29 billion last year. Its cardholder count in 2002 was eight million, a number that has been flat since 1998, according to figures from Diners.
  The problem for T&E is that people don't want to travel and entertain, due to a combination of slack business conditions and fears of war and terrorism.
  "Discretionary spend on the consumer side" is down, says Mark Smalls, executive vice president, brand management, for Diners' Chicago-based U.S. operation, which is owned by Citigroup Inc. "On the corporate side there (are) layoffs and job weakness."
  Diners did have some positives last year, including a larger merchant base. Also, its Club Rewards loyalty program has won industry awards for its benefits, including frequent-flier miles from the top 10 U.S. airlines, Smalls says. But several major carriers have spent more time in bankruptcy court than filling seats.
  Diners would not release data about Montage, its first revolving card, that was introduced last year. But a spokesperson says Montage "has been successful in expanding cardholder purchases beyond Diners' traditional T&E space."
  Meanwhile, JCB continued to make firm progress in the U.S. and internationally, expanding its merchant locations and cardholders while moving forward on smart card adaptation. JCB's charge volume was $42 billion, no change from the previous year. Merchant locations worldwide rose from 9.28 million in 2001 to 10.43 million, a 12% increase. Cardholders increased to 45.3 million in 2002, up 13% from 40 million the previous year. JCB contracted with 150,000 new merchants, including Courtyard by Marriott, the shoe chain Sketchers, and ticketing agent Telecharge.
  JCB is building on its foundation of Japanese tourists and immigrants by focusing on the West Coast. The card added 10,000 holders in Hawaii last year, according to Nobuharu Matsuzaki, general manager and executive vice president, JCB International Credit Card Co. Ltd., JCB's Los Angeles-based U.S. subsidiary.
  Many of those new cardholders came via a cobranded card introduced last June with Marukai wholesale markets, says Matsuzaki. That joins a cobranded card with Mitsuwa Marketplace shops located in southern California, Illinois and New Jersey.
  "In 2003, we'd like to add another 10,000 cardholders for each of the cobranded partners," says Matsuzaki. There are no plans to add another cobranded partner this year, however.
  JCB expanded throughout Europe in 2002, announcing partnerships with CartaSi in Italy, Bank of Ireland in Ireland and Garanti Bank in Turkey.
  But Asia is JCB's home and remains its top priority. China is seen as a major market. JCB has relationships with nine banks and 40,000 merchants there and contracted in January with merchant processor China UnionPay Co. Ltd. JCB predicts that several banks will begin issuing its card in China this year.
  Smart cards are also a priority. JCB says 20% of its cards carry chips and that by 2006, all will have chips and meet Europay/MasterCard/Visa standards.
  Last September, JCB introduced a hybrid smart card for a computer manufacturer in Taiwan that functions as a credit card and company ID, providing building access and cafeteria payment. Payments can be made with the swipe of its magnetic stripe or in a radio-frequency contactless mode.
  Both of these global T&E issuers claim to be cautiously optimistic for 2003. But international events are beyond their control.
 

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