Co-branded credit cards are off to a strong start in 2022 as top issuers rebuild their card portfolios. In July, credit card portfolios declined at top issuers, ranging from 9% to 21% since COVID. Growth returned later in 2021. According to the Fed’s latest numbers, revolving debt is back up, sitting at $1.037 trillion for November 2021 (seasonally adjusted), up from the COVID trough of $974.6 billion at year-end 2020.
If you are counting interest revenue, that is excellent news, particularly as the current metric indicates the average assessed interest is at a high point of 17.13%.
Co-branded cards play a significant role, but not all co-brands are branded network cards. Alliance Data, Capital One, Citi, and Synchrony are major players in the unbranded card space, which means co-brands that do not carry the universal access provided by Mastercard and Visa.
Today’s read comes from the American Banker, and it is a big move for Barclaycard.
After losing some high-profile retail partners for its co-branded cards in recent years, Barclays’ U.S. business is coming to market with new offerings such as a private-label card and buy now/pay later.
Barclays replaces Synchrony, The Gap’s previous credit card partner, in issuing a new private-label card that will accompany a suite of co-branded cards for the retailer and its related brands — Banana Republic, Athleta, and Old Navy.
With The Gap, Barclays U.S., for the first time, will offer consumers a standalone private-label credit card that does not operate on an open-loop network like Visa or Mastercard.
The big news about Barclay’s Gap card isn’t the win over Synchrony, it is that Barclaycard now has their first unbranded card. That is a whole new world entering the arena where Synchrony and Alliance Data dominate the middle market.
“Private-label credit cards are a critical component of the full spectrum of inclusive lending solutions that we will offer,” said Denny Nealon, CEO of Barclays U.S. Consumer Bank.
Cobranding will continue to be the company’s core strategy, Nealon emphasized, noting that since entering the U.S. market in 2004 with the purchase of one of the first digital banks, Juniper Financial, Barclays U.S. has become the ninth-largest U.S. credit card issuer, with 10 million customers, despite having no branches.
Citi, a long-player in co-brands, also announced a win as they renewed their co-branding relationship with ExxonMobil.
For the last 15 years, the two brands have been deeply committed to providing best-in-class offerings that drive significant value to credit card customers.
This shared ‘customer first’ commitment is exemplified by today’s launch of the Exxon Mobil Smart Card+.
Offered as an upgrade to existing ExxonMobil™ Smart Card cardmembers and available for new applicants, the Exxon Mobil Smart Card+ provides instant savings at the pump with up to 12 cents per gallon* on Synergy Supreme+™ premium fuel and 10 cents per gallon* on other Synergy™ fuel grades at over 12,000 Exxon™ and Mobil™ stations in the U.S. Cardmembers are also eligible to receive 5% back* as a statement credit on in-store purchases and car washes at Exxon and Mobil locations for the first $1,200 spent on non-fuel purchases per year.
With the average price of gasoline moving up, which the U.S. Energy Information Administration pegs at $3.368 as of January 31, 2022, Citi and ExxonMobil’s timing is perfect.
Mercator’s latest report on co-brands, titled Co-branded Credit Cards: Reinventing Themselves Post COVID losses, suggested that 2022 will be a big year for shifts in co-branded relationships. With Barclaycard’s move, a recent Chase win with Instacart, BJ’s change to Capital One, Alliance Data winning NFL, expect to see co-brands play a significant role in card acquisitions this year.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group