or the first time, American Express Co. has entered into an alliance with a financial institution to issue credit cards under its brand in the United States. The agreement with MBNA Corp. was announced on January 29, 2004; financial terms were not disclosed.

MBNA is already the world's largest issuer of Visa- and MasterCard-branded credit cards. The alliance with American Express means MBNA will be the first financial institution to participate in all three major networks.

The cards will be branded with the American Express logo. MBNA will own the loans and will manage and service accounts on its own systems.

MBNA will issue the cards and process the transactions over American Express' network, rather than through systems owned by Visa or MasterCard. The existence of three networks is expected to increase competition and promote innovation.

The deal marks what could be the beginning of a changing landscape in credit card issuing. It was made possible by the 2001 federal court decision in an antitrust case brought by the Department of Justice, in which Visa and MasterCard were ordered to drop their long-standing rules prohibiting their member banks from also issuing cards from competing brands, including American Express.

Visa and MasterCard are appealing the lower court's decision and say they will take it to the Supreme Court if necessary; if the appeal goes in the associations' favor, it will prevent the partnership between American Express and MBNA from being finalized.

American Express does have established partnerships with banks outside the United States to issue its card products but up to this point, the company has not been able to secure agreements within the country due to Visa and MasterCard's policies. It is significant that its first U.S. partnership is with a bank the size of MBNA.

Some analysts expect additional alliances to form as other banks stay competitive; more partnerships will also allow American Express to add increasingly popular debit products to its current list of offerings. Also, American Express' cardholder reward programs will likely benefit any issuing financial institutions by increasing consumer usage.

MBNA and American Express plan to begin issuing the new cards before the end of 2004.