iscover Financial Services LLC's announcement in August of a strategic marketing and acceptance agreement with JCB International Credit Card Co. highlighted not only the Japanese credit card's strength as the fourth-largest card brand in the world, but also its limited acceptance in the U.S. market.

The co-acceptance arrangement will redress that deficiency: JCB cards will be accepted at all merchant locations taking the Discover card.

In recent months, JCB began expanding its presence in the United States in an effort to capture more small to mid-sized merchants catering to Japanese tourists in key regions.

Working with major U.S. acquirers and processors since the mid-1980s, JCB offers an aggressive partner program to sign up their registered ISOs and merchant service providers (MSPs). The company would not disclose the number of merchants currently accepting the card.

Four million Japanese visited the United States in 2005, spending $12.9 billion total, according to statistics from the Department of Commerce.

Discover will begin processing JCB cards in early 2007; JCB will start accepting Discover cards in Japan toward the end of 2007 or the beginning of 2008, said Harit Talwar, Executive Vice President for Discover Financial Services. JCB "is an attractive player in bringing volume to the U.S. and in providing acceptance in Japan.

"We will represent all JCB volume in the U.S., and JCB will represent all Discover volume in Japan," he said. "Whether acquirers, ISOs or merchants, they will see an increase in volume."

Once the system is operational, American acquirers and ISOs will deal directly with Discover, rather than with JCB. The new system means separating out and rerouting JCB transactions. Setting up the system will not happen overnight, Talwar added.

Discover Network cardholders will be able to use their cards for purchases at JCB merchant locations and for cash advances at targeted ATMs throughout Japan beginning in 2008.

For U.S. merchants already accepting JCB cards, the change means Discover Network pricing and rules will apply, Talwar said. He would not disclose the revenue-sharing agreement between the two networks.

JCB cardholders visit six ports of call

Forty-six percent of all Japanese have a JCB card; of that number, 65% travel with the card, according to Linda A. Horwath, JCB Vice President, Manager - ISO Channel Sales. Japanese tourists visiting the United States head toward the following six major cities, all of which have JCB Plaza offices: New York, Los Angeles, Chicago, San Francisco, Las Vegas and Honolulu.

Texas, Florida and Washington are also major destinations. In addition, some 600 small geographic locations in 20 states have been pinpointed as regular stops on Japanese tourists' itineraries.

JCB highlights partner program

JCB asks its ISO and MSP partners to make the JCB card part of their packages when signing new merchants in any of the key regions, Horwath said.

"We'll pay them for every new qualifying JCB merchant they sign. They will also get residuals on that merchant ... for as long as there is any JCB volume that runs through that merchant," she said.

The JCB partner program certification process attempts to ensure that partners include the JCB module within their sales presentation package and that they understand the typical JCB consumer. "JCB cardholders tend to be more affluent," Horwath said. "They spend money when they're here. Their average ticket is over $250.

"I will work with each acquirer to design a training program that is best for them," she said. Training in cultural differences, as well as terminal set-up, may involve only a select number of agents working within the target regions.

JCB Plazas promote merchants

Horwath identified a key difference between JCB and the dominant American card brands: JCB Plaza offices in six major cities assist cardholders with travel information and typical concierge services, such as obtaining theater tickets.

Those offices work with local JCB merchants to promote their businesses - a potential selling point with merchants. Promotions may take the form of coupons or other incentives to direct tourists toward businesses that accept the card most Japanese travelers carry.

"There is usually someone onsite who speaks fluent Japanese," Horwath said. This assistance can be invaluable for steering tourists to the kind of shop or restaurant they could not find on their own.

Tourists "are going to look for that JCB emblem to be displayed in that storefront. If they don't see it, they probably are not going to visit that merchant," she added.

Discount rates are competitive with those charged by Visa and MasterCard but have fewer categories, Horwath said. JCB cards carry a flat discount rate based on category codes and charge merchants no statement or transaction fees. The card company does not have dual swiped/nonswiped rates and does not issue debit cards.