American Express to launch loyalty program

On Wednesday, financial services major American Express announced that it will be working in partnership with companies like Macy's Inc. and Exxon Mobil Corp. for launching a loyalty program this spring. This decision is taken by the company in order to attract a wider customer base.

The program will work like drugstore-rewards programs, as customers will earn points by spending at the seven companies. These companies also include Rite Aid Corp., Hulu and AT&T Inc. By using these points, the customers can pay their AT&T Wireless bill in order to pay their purchases at Rite Aid.

AmEx is an American multinational financial services corporation. It is headquartered in Manhattan's Three World Financial Center in New York City, US. The company, which has a payment processing network, will be working on the program by collecting fees from the participating companies.

The company has made the announcement amid preparation of ending its 16-year relationship with Costco Wholesale Corp. after the two didn't reach an agreement. AmEx is being attacked by the competitors such as J. P. Morgan and is now making efforts to expand into other areas, like setting up prepaid cards for low-end consumers. But this may take a lot of time to implement.

AmEx also has branding contracts with companies like Delta Air Lines Inc. These types of partnerships are intended to bring loyalty among particular types of customers and are called 'co-brands'. Generally, cardholders get extra perks by using co-branded cards. On the other hand, the merchant usually experience higher levels of spending on those cards.

According to chief marketing officer for Macy's, Martine Reardon, "The value proposition behind this is just really great for the consumer". According to her, American Express first came to her to discuss about partnering on a loyalty program three years ago.