Co-branded credit cards

by Sagor Roy
July 17, 2020

Co-branded credit cards:

A co-branded credit card bears the name of theissuing company and the credit card company. Such cards are often co-sponsoredby major merchants such as an airline, hotel chain or branded retailers andfrequently offer benefits related to the issuing company. The concept ofco-branded credit cards is relatively new in Bangladesh. But in westerncountries brands like Amazon, Apple, Walmart and Apple have their own creditcards that offer various reward schemes to loyal customers. Larger companiesare more likely to offer co-branded cards as they are complex to structure andrequire relationships across a range of institutions.

Benefits of co-branded credit cards:  

·        If used correctly, co-branded creditcards benefit the credit card company, the retailer and the consumers. Theissuing bank and the retailer earn revenue through various well-designedmonetization systems. A co-brandedcard lets a             user receivespecial discounts or accumulate points or miles that can be redeemed foradditional purchases.

·        Credit card companies pay a bonus totheir partner or even to the partner’s individual sales people every time a newcustomer signs up for the card. Co-branded cards encourage users to spend moreto receive rewards and discounts. 

·        The bank and the retailers can buildstrong customer loyalty by offering such cards. Customers tend to buy morefrequently and spend more in stores that offer loyalty schemes.

·        The parties involved can collect betterquality data on customer preferences and their spending habit. Such data helpsbrands to create new products or services and redefine their pricing policy.

The Scenario of co-branded credit cards in Bangladesh:

As mentioned earlier, the whole concept of co-brandedcredit cards is new in Bangladesh. Very few organizations have launched thiscard and most of them are well-established banking institutions and reputedcorporate giants.

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