Skip nav to main content.

Co-Branded Credit Cards are More Important Than Ever for Retailers

Have you noticed how eager retailers are to sign you up for their branded credit…

  • August 27, 2019

Have you noticed how eager retailers are to sign you up for their branded credit cards? When you buy online from any number of retailers these days you’re likely to be offered a nice discount off your purchase, just for signing on for the card. There are good reasons for this, according to market research firm Packaged Facts

Packaged Facts estimates that co-branded credit cards generated $990 billion in purchase value in 2018, up an average of 8% from 2016.

Retailer co-branded credit card purchase value grew at the fastest annual rate. Packaged Facts’ findings are featured in the brand new study Co-Branded and Affinity Cards in the U.S., 7th Edition, now on sale.

In many ways, co-branded credit cards are more important than ever. The cards are often powerful components of retail loyalty programs and strategies that generate revenue for not only their issuers but also retail partners.

The revenue contributions can be quite significant, helping those retail partners invest in core operations.

As loyalty tools, they also remain very important, possessing rewards and other benefits that can help retail partners maintain or grow their more frequent, higher-spending customers.

Co-branded credit cards also benefit from having cardholder bases that are generally more affluent and credit worthy than average, which translates to higher-than-average credit card spending per cardholder and less risk attached to associated loan balances.

This makes the co-branded space a highly competitive arena for capturing prized affluent consumers.

Major Financial Institutions Are Becoming More Competitive

However, the major financial institutions participating in this market may also be its greatest threat. Several years out from the recession, the largest national banks have almost wholly unburdened themselves of “run-off” credit card portfolios associated with legacy programs that had been weighing them down.

They are leaner and meaner, and they can now focus more exclusively on building their own credit card programs.

At the same time, their scale and historical margin expectations combine to allow them to build highly competitive “own-branded” (proprietary) credit card programs that provide very attractive rewards and benefits.

This is especially true of a bevy of new cards targeting highly affluent travelers and spenders, which can go toe to toe against much of the co-branded competition.