Private Label Credit Cards: Thriving in the U.S. and Shaken Up in Canada

by Brian Riley 0

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Read Mercator’s recent report on PLCC and you will see it thriving in the U.S.;  read the Financial Post’s update on Canada’s TD Bank and you will see a recent upset as the issuer exits the PLCC market.

Flexiti, the acquiring company, catapults into a top lending position with the acquisition and picks up several major relationships.

  • “This acquisition of TDFS’ private label credit card portfolio represents an important milestone for our company, and the consumer lending space in Canada, as it instantly positions us as one of the largest consumer lenders in the country,” said Peter Kalen, founder and CEO of Flexiti.
  • The portfolio of cards targeted towards specific store brands includes merchants in the jewelry, furniture and home improvement categories, such as Peoples, Birks, Ethan Allen, La Z Boy and Kent.

Card life at TD got very complicated when they bought the MBNA Canadian portfolio from Bank of America back in 2011.  Instead of the crisp model for Canadian lending, where issuers only either offered one network product, not dual Mastercard and Visa issuing as in the U.S., TD picked up 900 granular affinity programs, covering a wide range of colleges, hockey teams and social organizations.

With a portfolio less than 5% the size of BoA, Citi and Chase combined, TD offers more than ten times the number of card plans presented by three of the worlds top card companies.  The outdated MBNA business model bloats the TD receivable with complex strategies that are unnecessarily complicated.

  • TD’s decision to sell the Canadian portfolio aligns with its strategy of simplifying its business model and allows it to focus on its core businesses of TD credit cards, MBNA and TD business credit cards, said bank spokeswoman

TD remains a limited PLCC player in the United States, but for now, say goodbye to a non-branded credit card solution for a top Canadian bank.

Overview by Brian Riley, Director, Credit Advisory Group