Branded credit cards can serve as avenues for driving customer loyalty in a sort of revival of ways they were previously used by retailers.
In the past, a significant number of the largest U.S.-based retail chains aggressively marketed their own branded retail store credit cards as a way to make it easy for their customers to spend more at their stores. Such company-managed credit cards encouraged those customers to return to stores often as those cards were only usable with the respective retailer. This practice has been revived in a new form that rewards shoppers' loyalty when they use what are called "co-branded" cards.
Standalone credit programs that retailers managed themselves have largely been replaced by co-branded credit cards with large banking companies and credit services companies.
A basic rewards program typically allows customers to take advantage of discounts that are not available to nonmembers. The combination of rewards with a credit card creates a new paradigm where consumers repeatedly use the financial services made available through the partnership. For retailers, it is a way to maintain a steady flow of traffic as consumers will be able to spend more money by using credit beyond their cash reserves. The arrangement can also keep their brand in mind even when customers are making purchases elsewhere.
The mix of companies that offer or have plans to offer credit card loyalty programs in partnership with banks includes Uber, Starbucks, Amazon, and PayPal.
Retailer loyalty credit cards continue to grow in patronization among consumers. According to a census conducted in 2017 by Colloquy/Loyalty One, there were 3.8 billion loyalty program memberships held by consumers in the United States. This includes all types of programs along with consumers holding multiple memberships with different companies.
More Than a Store Card
Co-branded credit cards may be usable with other retailers who honor payments from those financial institutions. Depending on the specific terms established for the cards, other businesses that accept MasterCard, Visa, American Express, or Discover might let consumers use their store-branded cards to make purchases with them. For example, a co-branded card for a gas station might be accepted at a grocery store or restaurant. Certain programs allow for an accumulation or use of loyalty rewards for purchases made with the cards outside of the retailer.
Such cross-promotional services have included offering consumers rewards points that can go towards discounts or free purchases of gasoline. This allows businesses that do not offer their own co-branded credit cards to engage with customers of retailers they are aligned with. For instance, a major apparel retailer could possibly let their customers build up rewards points they can spend on local dry cleaning services or restaurant who cannot afford to establish programs of their own.
Partnering with financial institutions mitigates a retail company's financial risk and changes the nature of retail credit cards, which traditionally had lower credit standards and more lenient terms than bank-issued cards.
The programs in this roundup represent a cross-section of some of the available co-branded credit cards with retail customer loyalty systems.
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