Walgreens now might be able to help with consumer financial health.
The firm filled 19.1% of U.S. prescriptions, behind CVS. According to the Walgreens website, the firm interacts with “approximately 8 million customers in its stores and online daily.” With 9,021 drug stores in the U.S. and 50 states, the firm has quite the base to support a credit card.
The firm announced its interest in financial services in its most recent Investor Presentation, indicating that credit, debit, and prepaid are in the works. Synchrony underwrites the co-branded offering.
According to a press releaser earlier this year:
- The new cards will be the first in a range of new financial products and services planned by Walgreens to continue its health and well-being focus and enhance its loyalty program and customer personalization. Walgreens plans to explore a number of Mastercard solutions across the payments technology ecosystem, including services such as insight and analytics, customer engagement and loyalty, cybersecurity, and point-of-sale financing, including installments.
The timing is suitable for a cobrand like Synchrony/Walgreens. As we mentioned in a recent report on cobrands, the market, which usually ties closely to private label credit cards (PLCC), is in a state of flux. In addition, PLCC cards have been significantly affected by trends in Buy Now Pay Later lending. At the same time, branded network card growth was impacted by COVID-19, and cobrands can bring quick scale. The venture is in good hands with Synchrony, a top co-branded resource.
We will have to watch and see how CVS responds. However, CVS has nearly 25% of prescription volume and could certainly fit well with other top players, such as Citi, Capital One, and American Express. In addition, Rite Aid just announced a co-branded Medicare Advantage product for Southern California, so while air travel and co-branded cards lag, this new channel has the potential to gain quick scale.
Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group