Name-your-price pioneer priceline.com and NextCard announced yesterday that they will begin offering consumers a customized, name-your-own-terms credit card in the second quarter of this year.
Under the exclusive agreement, NextCard, which issues MasterCard and Visa credit cards online, will pay priceline a fee when a customer applies for a card. As part of the joint marketing strategy, NextCard will give customers money toward bids for other products on priceline’s site if they apply for a card and use it to complete the purchase.
Credit will be issued based on a combination of the customer’s proposed terms and NextCard’s evaluation of the customer’s credit history.
“Priceline.com is pleased to partner with NextCard to offer our customers a very specialized e-commerce tool, merging priceline.com’s name-your-own-price philosophy with NextCard’s unique real-time, online decisioning and customization capabilities,” said Richard S. Braddock, chairman and CEO of priceline.com.
Offer Excludes Competition
NextCard will be the only player in the name-your-own-terms credit card offer, so it will not operate in the same manner as priceline’s usual name-your-own-price business model. Priceline.com ordinarily offers a range of products in the category of airline tickets, hotel rooms or groceries, with all products coming from a number of competitors.
Because of the lack of competition, the cards may more closely resemble other co-branded cards that give benefits related to the non-card partner.
Priceline will be able to offer online credit approval in eight seconds, personalized card designs, online shopping security protection and the NextCard Concierge wallet companion, a downloadable program that automatically fills in online forms and remembers passwords. NextCard also provides all of its card holders e-mail account alerts, electronic statements and electronic bill payment.
Moving Beyond Travel Services
Priceline.com has been aggressively moving beyond just taking bids for airline tickets and hotel rooms. During 1999, the Stamford, Connecticut-based company announced plans to introduce name-your-own-price services for rental cars and long-distance telephone calls, and also announced plans to expand internationally.
In addition, priceline licensed its system to WebHouse Club to enable the company to offer name-your-price retail goods, such as groceries in New York City and the greater Philadelphia, Pennsylvania area.
The new developments catapulted priceline to a banner day yesterday, as the company hit records in several of its sales categories. Priceline brought in its highest one-day revenue total — $3 million (US$) — and reported seven-day sales records of 8,000 airline tickets and 20,000 hotel room nights. Priceline WebHouse Club reported record sales and its first 10,000-customer day on January 9th.
Rebates On Cars In The Works
Meanwhile, it has been reported that priceline.com is preparing to offer Internet rebates on select vehicles. The company is expected to announce its first automaker partnership later this month.
According to priceline, while the rebate program will not be an exclusive with one manufacturer, the company will nonetheless make certain that it does not offer rebates on competing vehicles. The participating manufacturers will decide on the amount of the rebates.
Bids In Texas
Once rolled out, the rebate will be featured on priceline’s home page as a click button near its auto section. The company is well on its way to offering its car-bidding system on a national basis.
Apparently, priceline is hoping to begin taking bids in Texas this quarter, even if it means not charging dealers fees as it does elsewhere else. Texas motor-franchise laws forbid dealers to be charged fees for selling cars via the Internet.
Venture Firms Sell Priceline.com Shares
In a separate development, priceline.com disclosed yesterday that General Atlantic Partners sold five million of its shares, while Vulcan Ventures, Inc., an investment firm controlled by Microsoft co-founder Paul Allen, sold off two million shares.
Six institutional investors, including Massachusetts Financial Services Co., Putnam Investments, Inc. and Kobrick Capital purchased the shares, according to Braddock.
At the end of the day, General Atlantic owned 20.4 million shares of priceline.com, while Vulcan Ventures held 7.09 million.
Investors were none too pleased by the sell off, as priceline.com shares fell 3 yesterday to 54 1/4.
The stock soared after priceline.com went public last March for $16 per share. The share price, however, has plummeted 67 percent from a high of 165 last April 30th.
NextCard operates a network of more than 25,000 affiliates and has exclusive card relationships with a few other online brands, including Amazon.com and DILBERT.
The company also operates its own online shopping site, called GoShopping!, and publishes the NextCard eCommerce Index, which tracks online transaction activity by NextCard holders to rate the popularity of various online merchant sites.