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AOL inks $500 million credit card deal

America Online and First USA announce a marketing agreement to distribute First USA's credit cards that could generate as much as $500 million for the online giant.

America Online and First USA today announced a marketing agreement to distribute First USA's credit cards. The five-year deal could generate as much as $500 million for the online giant.

As previously reported, the deal will also allow First USA to become the exclusive marketer of credit card products over the entire AOL network of Web sites, including AOL.com, AOL Instant Messenger, CompuServe, and its Digital City local guide.

The agreement could generate up to $500 million if certain undisclosed thresholds are met, but also contains significant guaranteed revenue to AOL and significant marketing commitments to First USA.

In 1996, AOL and First USA were the first companies to offer a major online cobranded credit card with the AOL Visa card. This agreement extends that relationship.

"First USA has been on a tear--they also signed a huge deal with Microsoft," said Bill Burnham, an online banking analyst at Credit Suisse First Boston. "This clearly represents how aggressive (First USA) is being in the online credit space."

Burnham added that the deal could pull in as much as $500 million depending on how many accounts First USA can acquire through AOL.

"The previous agreement was successful enough for them to step up to the plate again," he said.

"AOL's members represent the largest consumer audience in cyberspace, and this agreement is an excellent example of how we help make their everyday lives easier by providing them with the credit card resources they need all in one place," AOL President Bob Pittman said in a statement.

Pittman also noted that the 1998 America Online/Roper Starch Cyberstudy showed that the convenience and ease-of-use of handling personal finances online made it one of connected consumers' most popular activities.

"First USA has been in the forefront of recognizing the potential of the online medium,'' said Jan Brandt, president of marketing at AOL, in a statement. "They have been a close partner of ours since 1996, and the renewal and expansion of our current agreement proves the real power and value that the interactive medium offers to key marketers and advertisers dedicated to reaching the mass-market consumer."

The agreement is one of the largest e-commerce partnerships to date. In a similar deal inked last fall, First USA agreed to pay Microsoft's Web portal MSN.com $90 million over five years.

Additionally, parent company Bank One signed a deal in November with Excite to advertise its credit cards in the Web portal's financial center. Excite estimated the deal would generate $125 million in revenue, depending on performance guarantees.

First USA is the largest Visa and MasterCard lender in the United States, according to the company. It offers credit cards under the First USA, First Card, and Bank One names and through some 1,300 marketing partners.