19 September 1999
Source: US national newspaper, September 19, 1999.
By ROBERT D. HERSHEY Jr.
AIMING at consumers who want to shop on line but lack confidence in Internet security, American Express is starting to mail applications for the blue cards it is adding to its array of green, gold and platinum. Starting in November, in time for the holiday season, shoppers will be able to swipe American Express blue cards through readers they have plugged into their home computers. This cards contain a "smart" chip, the company says, that works in tandem with the customer's PIN number to prevent unauthorized use.
Card readers will be supplied free through Jan. 31 to people who meet the credit qualifications. They will cost $25 thereafter.
And just like other credit cards, the blue cards can be used in stores. At least one expert, Paul C. Kocher, president of Cryptography Research Inc. in San Francisco, is impressed. "It's a brilliant marketing approach" that marries the Internet and the credit card, he said, predicting that it would be "very successful."
While Mr. Kocher contended that any encryption can be broken with enough effort, the new blue card will be more reliable and far less susceptible to fraudulent use than cards without the smart chip, he said. Just in case, American Express will protect blue-card users against unauthorized charges, as well as damage or theft of their purchases and the no-return policies of some merchants.
The blue cards were formally introduced on Sept. 8 but have not yet been widely marketed. They are intended to extend American Express's reach into the credit-card business, where its existing entry is the Optima card. The Optima card, only modestly successful, carries interest rates ranging from the prime rate plus 7.9 percent to the prime plus 9.9 percent.
Neither the blue nor the Optima cards, unlike those of other colors, carries an annual fee. The blue card will have a six-month introductory period in which no interest will be charged on revolving balances. Then the fixed rates will be 9.99 percent for most customers and 12.99 or 15.99 for those who are less creditworthy. The company's traditional charge cards, as opposed to credit cards, require complete payment each month.