December 28, 2001, 12:00 AM

And now, virtual plastic

For decades, stores have tried to create customer loyalty by offering proprietary credit cards. Now, further evidence that web retailing is becoming more like traditional retailing, but with a twist, Amazon.com has introduced a proprietary credit "card."

For decades, stores have tried to create customer loyalty by offering proprietary credit cards. Now, further evidence that web retailing is becoming more like traditional retailing, but with a twist, Amazon.com just in time for holiday shopping introduced a proprietary credit “card.”

It’s not actually a card, but a credit account administered by the Citi Commerce Solutions division of Citibank in conjunction with Amazon.com Financial Services Inc. Amazon will offer a line of credit to customers who don’t have credit cards or who want a proprietary credit account with Amazon.

To launch the card, Amazon offered a three-month, interest-free grace period on orders of more than $200 placed through Jan. 31. The finance offer does not apply to purchases made from the Amazon Marketplace, auctions or Z shops, or at the Circuit City portion of Amazon. The offer also cannot be used for gift certificate purchases and cell phone deposits. The interest rate on the card is 22.9%.

The card is another way that Amazon has identified of tapping into its customer base, analysts say. “This new virtual credit card will resonate with cash-strapped consumers,” says Paul Ritter, retail analyst with the Yankee Group.

It’s also of a piece with other partnership deals, such as the deal with Circuit City in which Amazon customers can pick up electronics purchases at Circuit City stores. “By transferring much of the financial risk and inventory carrying costs to third parties-Citibank for the virtual credit card, Circuit City for electronics-they are making strides to improve margins and enhance their opportunity for achieving pro-forma profitability,” Ritter says.

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