A co-branded card is a credit or debit card that a retailer issues in partnership with a card network or financial institution. These cards can be used everywhere where bank cards are accepted. What makes co-branded cards stand out among other card products is that they bring cardholders certain benefits when making purchases at a particular retailer. Typically, co-branded credit card programs offer discounts, bonuses, miles, cash back, points, or rewards.
Usually, both the logo of the retailer and the bank or card network are imprinted on such cards, as the issuance of co-branded prepaid cards is sponsored by two parties. The main goal of such a partnership is to attract customers and incentivise them to make purchases at certain businesses.
Department stores, warehouse clubs, airlines, and gas station chains are most likely to offer co-branded cards.
If a business decides to launch a co-branded card, the essential thing to do is to partner with a financial institution. It can be a bank or a card network.
Frequently, the first go-to option is the acquiring bank that already handles processing for this retailer. In this case, there’s a chance to kickstart a card-issuing partnership much faster because the bank already knows the retailer.
A partnership with a card network, like Visa, Mastercard, or American Express, is much harder to establish. For example, to get assisted by Visa on your co-branded card with one of their issuers, you need to develop a business plan and define the competitive advantages of your card. Then, determine the co-branded credit card issuer that aligns with your strategy and prepare a request for proposal. In case it works out, such a partnership is likely to get some media coverage and word-of-mouth publicity, resulting in more customers being reached.
Regardless of the financial institution involved, the bonuses that customers collect when shopping at the retailer using co-branded cards are accumulated by the card-issuing institution.
The card-issuing banks are also interested in co-branded card projects, as partnering with a well-known retailer brings customers to the bank. In fact, co-branded credit cards for banks represent a strategic tool for attracting new clients, strengthening loyalty, and increasing transaction volumes.
As for the money, the co-branded card partnership conditions depend on the agreement. For instance, financial institutions may pay retailers a referral fee for every approved application for a co-branded card or cover the rewards customers earn, enticing them to keep making purchases with their card at the particular retailer.
Co-branded cards provide benefits for both the retailer and the cardholder.
For the retailer, a co-branded card can attract new customers and keep existing ones by offering special incentives and rewards. Customers who have a co-branded card are more likely to shop at the retailer, as they can take advantage of exclusive offers, such as discounts, cashback, miles, or loyalty points.
For the cardholder, co-branded credit card benefits include an opportunity to save money and earn rewards while shopping at their favourite store or merchant. Co-branded cards typically come with perks that are not available with regular credit or debit cards, such as exclusive access to sales, free shipping, and other benefits. Cardholders can also earn rewards for every purchase made using their co-branded card, which can be redeemed for future purchases, travel, or other rewards. Co-branded cards can also offer additional benefits such as extended warranties, price protection, and travel insurance.
There are also potential cons of co-branded cards for both retailers and cardholders.
For retailers, it's a fact that co-branded cards usually come with higher processing fees. When customers use co-branded cards, the retailer may have to pay a higher processing fee to the card issuer compared to other cards. This can be a significant expense, especially for smaller businesses.
For cardholders, the cons may be the following:
Co-branded cards are a marketing tool, so getting yourself one isn't difficult at all. In the US, 29% of adults have co-branded credit cards. It’s more than 73 million people!
You’re likely to be offered a co-branded card when shopping at a retailer that has such a partnership. Alternatively, you can ask the retailer or a bank about their co-branded products and the conditions of getting them.
Be sure to learn about the fees and limitations before signing up for a co-branded card. It’s also better to examine the reward program rules to avoid misunderstandings and failed expectations.
Co-branded cards are often confused with store, private label, and affinity cards. The reason is that these card types have certain similarities, but there are also distinctions worth knowing.
So, store cards are proprietary retailers’ cards. Same as co-branded cards, they allow customers to receive benefits, discounts, free deliveries, etc. But unlike co-branded cards that can be used everywhere where bank cards are accepted, store cards can only be used at one particular retailer. A private label card is just another name for store cards.
An affinity card is similar to a co-branded card because it also involves two parties, one of which is a financial institution. But with affinity cards, the other party is usually a charitable organisation. A percentage of every purchase a customer makes with an affinity card goes to that particular charity.
A co-branded credit card is a type of credit card that is issued by a financial institution in collaboration with a retailer, airline, or other business.
Let's take a closer look at some of the most successful and illustrative co-branded credit card examples on the market.
Amazon Prime Rewards Visa Signature Credit Card
A co-branded card with a legacy spanning over two decades, this product is the result of a collaboration between Chase and Amazon. It rewards Amazon Prime members with:
Additional perks include no foreign transaction fees, making it a practical option for international shopping and travel. The card exemplifies how a retail giant can deepen customer loyalty while enabling seamless and rewarding purchasing experiences.
Hilton Honors Aspire Card from American Express
This premium travel-focused card combines Hilton's extensive global hospitality network with American Express's prestige and benefits platform. It's tailored for frequent travellers and includes:
It serves as a powerful tool for Hilton to retain loyal customers by offering rich travel and lifestyle incentives.
Citi Costco Anywhere Visa® Card by Citi
Costco teamed up with Citi to offer a card that's centred on maximising everyday cashback. Benefits include:
Notably, there's no annual fee with a Costco membership, and the rewards are redeemable as Costco store credit or cash, boosting foot traffic and purchases within Costco's ecosystem.
Delta SkyMiles® Gold American Express Card
This card is a result of a strong airline–finance partnership between Delta Air Lines and American Express. It's ideal for frequent Delta flyers, offering:
It also includes various travel protections and no foreign transaction fees. Co-branded airline cards like this one create a tightly integrated experience for loyal flyers, reinforcing brand affinity.
Starbucks® Rewards Visa® Card
In collaboration with Chase, Starbucks launched a card designed for frequent coffee lovers. Perks include:
By connecting the payment experience with Starbucks' loyalty program, the card incentivises daily brand engagement.
Southwest Rapid Rewards® Credit Card (by Chase)
This card strengthens Southwest Airlines' loyalty program, allowing cardholders to earn points on:
It also includes anniversary bonus points, which boost retention, and a path toward earning the Companion Pass—one of the most coveted perks among domestic travellers.
A co-branded debit card is similar to a co-branded credit card, but instead of providing credit, it allows users to access their own funds in a linked checking or savings account.
We’ve just found out about three co-branded credit card issuers, but not only credit cards can be co-branded. Here are a bunch of debit card programs.
Co-branded credit cards have become increasingly popular in recent years, with more and more companies partnering with banks to offer them. According to the Nilson Report, the co-branded credit card market in the US had a purchase volume of over $800 billion in 2019. This represented a 9% increase from the previous year.
Another report by Research And Markets projected that the global co-branded card market will grow at a compound annual growth rate (CAGR) of 6.8% between 2020 and 2025. The report attributes this growth to the increasing demand for co-branded credit cards among millennials and the growing popularity of loyalty programs.
In terms of trends, there has been a shift towards more niche co-branded cards targeting specific demographics and interests. For example, there are co-branded cards that offer benefits to travellers, sports fans, and even pet owners. Additionally, there has been a rise in the use of co-branded debit cards, particularly among younger consumers who are wary of taking on credit card debt.
Overall, the co-branded card market is expected to continue to grow in the coming years, driven by the increasing demand for loyalty programs and the desire for more targeted rewards and benefits.
