AmEx to dump federal travel, purchase card biz

American Express Co. yesterday said it plans to drop out of the competition to supply agencies with the next generation of charge cards, which will test innovative services such as smart cards and electronic commerce applications.

In February, the General Services Administration selected five banks and American Express to compete for the federal government's credit card business. Millions of government employees are expected to use the cards to buy as much as $100 billion worth of goods and services in the next 10 years, according to GSA. But American Express said the program does not make economic sense; the company plans to focus on expanding its corporate business instead.

American Express also said it will drop out of a smart card pilot program it launched in September with the Marine Corps. In that program, Marines in North Carolina used credit cards embedded with computer chips to purchase meals at mess halls, enter manifest information for troop deployments, sign out weapons and make travel plans.

American Express said it will continue to supply government fleet cards, which federal employees use to buy gasoline and other car expenses.