Goldman Sachs begins rolling out its GM co-brand, their second big play to capture card volume. The recent win will add scale to Goldman Sachs with another top U.S. partnership. According to Reuters:
Goldman bought the GM credit card portfolio in what was reported to be a $2.5 billion deal in 2020. It gains roughly 3 million existing GM credit cardholders, whose accounts were converted to Goldman from Capital One Financial Corp (COF.N) this week, and all new applicants, who can apply using the Marcus by Goldman Sachs app.
The card gives customers 7 points per $1 spent at GM and 4 points per $1 spent elsewhere, with an annual interest rate of between 14.99% and 24.99%, after an initial promotional period.
Mercator covered the co-brand credit card space in this recent report. We mentioned that co-brand partner shifting has become common in the payments industry as issuers re-evaluate the revenue dynamics of co-branding and partners look to squeeze out more revenue. The shift will certainly not be the last this year.
Although the GM/GS deal is notable for its size, the more exciting move comes from U.S. Bank, who today announced benefits for electronic vehicle charging, an industry first. According to its announcement, U.S. Bank promises rewards on par with gasoline incentives for payment cards.
Cardmembers can now earn up to 4x points or 4% cashback for their EV charging transactions, depending on the terms and conditions of the rewards offered when using their cards for gas station purchases.
“We have expanded our card rewards to put EV charging transactions on par with gas,” said Steve Mattics, head of U.S. Bank Retail Payment Solutions. “We continuously evaluate our credit card offerings to ensure we provide meaningful rewards to our customers. In addition, as options for fueling vehicles expand from gas to a mix of gas and electric charging, we are making sure that our cards follow our customers’ needs and preferences.”
Mattics noted that, as an example, the U.S. Bank Altitude Connect® Visa Signature® Card provides cardmembers with 4X points for purchases at gas stations. Using this same card, cardmembers can now earn the same point value for their EV charges.
One of our family’s goals in 2022 is to acquire an electric vehicle (EV), or at least a hybrid late in the year. U.S. Bank hits on an interesting aspect of EVs because charging is not necessarily free. Charging a Tesla at home involves a $500 adaptor and potentially $6,500 in installation costs, according to this automotive site. It can be done cheaper, with a trickle charge, but that takes much more time to effect a charge.
However, traveling on the road for a long trip gets more complex. There are more pay-stations than free-charging stations in the U.S. today, and according to this trade journal:
On average, it costs between $0.30- $0.60 kWh to charge an electric vehicle. Therefore, this means that a small car could cost about $11.50 to $23 to fully charge while a bigger or long-distance vehicle could cost between $22.50 to $45.
The prices differ because the cost of charging a vehicle varies depending on the company providing the charging services, the EV charging level, type of charger, and charging port location depending on the demand.
Or, if you have a Tesla:
Buying this connector will cost you under $160. Another option is the TeslaTap brand that costs between $140- $260 depending on the amps you desire.
Tesla charges an average of $0.28 kWh to use its superchargers. If you’re using stations that charge per minute, it’s $ 0.26 for cars charging below 60kWh, while charging above 60kWh costs $0.13.
While Goldman Sachs made headlines with the GM Card, this interesting U.S. Bank innovation is one of many leading-edge card technologies offered by this top issuer. Last year, you may recall that U.S. Bank developed a service where “an airline can send a time-restricted virtual corporate card from its app to a passenger stuck at the airport. The airline can push the card from their app to the passenger’s mobile wallet and use the card to pay for a hotel or meals.” Their development portal is filled with data tools that foster real-time development.
What to watch here is how snazzy Goldman Sachs will get with their payment card related to electronic vehicles. U.S. Bank started the innovation, but according to the GM site, “GM is on its way to an all-electric future, with a commitment to 30 new global electric vehicles by 2025.”
So Goldman can’t rest on its laurels. Instead, it needs to amp up its game.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
