Increasing Customer Loyalty with Store-Branded Credit Cards


Increasing Customer Loyalty with Store-Branded Credit Cards

Customer loyalty is getting harder to gain these days with the recent rise in connected consumers and promiscuous shopper behavior.  What better way to create loyalty than offering your customers a store-branded credit card that’s co-branded with a payment technology network such as American Express, Visa or MasterCard that rewards your customers and encourages them to visit your stores or website?

Store-Branded Credit Cards

Store-Branded Credit Cards are rapidly becoming a vital weapon for retailers all over to increase sales and drive customer loyalty.  Rather than competing with major credit card companies, retailers can partner with them and an issuing bank to launch a co-branded credit card which the retailer can use to fund rewards-vouchers and reward points for their customers.

Even without a loyalty program, these store-branded credit cards enable retailers to get to know their customers on a more personal level.  A Co-branded credit card program could be a key mechanism to run (and fund) a customer scheme program.  Until recently, the only loyalty schemes offered by British retailers Marks & Spencer (M&S) and the John Lewis Partnership, for example, were run off their MasterCard credit cards.

Competitive Analysis

Another important benefit of store-branded credit cards, such as Sears, is to generate competitive insight from the cardholders.  Sears can see its cardholders’ transaction data at a whole new level or wherever else their customers are shopping.  This is powerful insight that can be used to target customers to pull them back from spending at a competitor or to develop new propositions based on the shoppers’ behavior.  A retail-branded credit card can also be the foundation product when a retailer is looking to expand into other financial services.

To keep it simple: store-branded credit cards must be embedded into the business.

Establishing a Co-Branded Credit Card

In order to establish a co-branded credit card for your company, the steps can be quite elaborate. The process usually takes a minimum of 6 months so you need to plan ahead and prepare accordingly. To begin the process you must first decide which credit card network works best for you.

**American Express is generally more selective in terms of the merchants they’re willing to work and co-brand with, but Visa, MasterCard and Discover are all great options to consider as well.

Each of them require you to draft a business outline of your company and its demographics to determine which issuer within the network of your choice you want to work with. They also require you to write a proposal to the selected issuer and establish a contract with them. Although that may be the general course of action, each credit card network has its own specific instructions: Visa, MasterCard, Discover, AMEX (Information not available online).
Pros and cons comparison

Pros & Cons of Having a Co-Branded Credit Card

While the idea of seeing your company’s logo in people’s wallets might seem appealing, you must first weigh out the pros and cons of co-branding before you decide to enter the space.


1. Increasing Customer Loyalty

Having a co-branded credit card often leads to substantial growth in customer loyalty. Your existing customers will be less likely to turn to your competitors as they know they can reap better benefits and rewards if they make their purchases with you. In addition, your brand name will have increased visibility as customers – and everyone around them – will be exposed to it every time they reach for their credit card. This not only ensures their loyalty but it strengthens it as well.

2. Increasing Customer Growth

Co-branded credit cards also win you new followers in addition to securing your existing customers, especially if you give lucrative and practical rewards. Someone who used to shop with your competitor might opt to shop with you now.

3. Reducing Costs

One of the biggest costs that retailers complain about are interchanging fees on credit cards. Under the terms of most co-branding relationships, retailers are dismissed from paying these fees for transactions made using their co-branded credit cards.

4. Sharing Consumer Loyalty

When a credit card issuer and merchant decide to co-brand a credit card together, they inevitably pool their customer databases as well. This alliance enables the issuer to access the merchant’s customer base and vice versa.



For the same reason that someone would pick your co-branded credit card due to the affiliation you have with your partner, they may choose not to if dislike your partner.

Managerial Attention

A successful credit cart program requires significant resources and close attention to detail. Your brand must be comfortable making the required investment in order to gain additional value from a co-branded credit card or you will risk turning it into a negative brand experience for your valued customers.


Co-branded credit cards prove to be useful and cost-effective once you understand how they work. We recommend getting at least two different co-branded credit cards. This enables your brand to maximize the benefits you would receive from each without overwhelming yourself or spreading your rewards too thin.

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