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Co-Branded and Affinity Cards in the U.S., 5th Edition

  • August 2015
  • -
  • Packaged Facts
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  • 192 pages

In 2014, co-branded credit cards generated $809 billion in U.S. purchase value: Visa leads network operators with a 47% share, followed by MasterCard (30%) and American Express (23%). Competition is intense, as a growing bevy of players chase a finite universe of affluent prospects with more rewards and broader, deeper card features and benefits. But co-branded cards can be further leveraged to draw more Millennials into the cards and broader banking mix, bringing smiles to card partners and issuers alike. And at a time when the concept of brand loyalty is on the ropes, well-positioned issuers can leverage merchants’ need for sophisticated loyalty marketing strategies.

Co-Branded and Affinity Cards in the U.S., 5th Edition provides a wealth of insight on trends shaping this increasingly competitive industry, helping market participants plan their co-branded relationships and strategies.

Table Of Contents

Co-Branded and Affinity Cards in the U.S., 5th Edition
Executive Summary
Report Scope
Market size and forecast
Market factors
Number of co-branded credit card programs
Retail cards most prevalent, followed by airline and hotel cards
Visa tops relationship share
Co-branded airline credit cards
Co-branded hotel credit cards
Airline guest, frequent flyer, and hotel guest analysis
The power of frequent flyers and frequent flyer programs
Tracking hotel visitor affluence
Co-branded credit card case studies
Amazon.com Rewards Visa Card
BuyPower MasterCard
Carnival World MasterCard
Citi Hilton HHonors Visa Signature Card
Ralphs rewards plus Visa Card
Ritz-Carlton Rewards Credit Card
Sam’s Club MasterCard
Southwest Airlines Rapid Rewards Plus and Rapid Rewards Premiere Visa Cards
Virgin Atlantic World Elite MasterCard
Walmart MasterCard
Wyndham Rewards Visa Card
Card association co-branded strategies
American Express
MasterCard
Visa
Co-branded and Affinity Credit Card Issuer Strategies
Alliance Data Systems
Bank of America
Barclays
Capital One
Citibank
J.P. Morgan Chase
Synchrony Financial Services
U.S. Bank
Wells Fargo
General-purpose credit card consumer usage trends
Co-branded and affinity credit card consumer usage trends
Trends over time: credit cards with affiliations/rewards
Affiliation/rewards credit card usage, by demographic
Affiliation/rewards credit card usage, by household investments
Co-branded/affinity card usage
Co-brand/affinity credit card application influencers
Chapter 2: Market Size and Forecast
Co-branded credit card market size
Table 2-1: U.S. Co-Branded Credit Card Purchase Value by Operating Network, 2014
Market factors
Number of co-branded credit card programs
Rewards an expected part of the bargain
Partnership industry segments
Retail cards most prevalent, followed by airline and hotel cards
Table 2-2: U.S. Co-Branded Credit Card Programs by Issuer and Card Type, 2015
Table 2-3: U.S. Co-Branded Credit Card Programs: Issuer by Partner Segment, 2015
Visa tops relationship share
Table 2-4: U.S. Co-Branded Credit Card Programs by Issuer and Operating Network, 2015
Co-branded airline credit cards
MasterCard gains; American Express loses
Table 2-5: U.S. Airline Co-Branded Credit Card Programs: By Airline, Operating Network and Issuer,2015
Co-branded hotel credit cards
Red Roof Inn launch suggests co-branded has not given up on Middle America
Table 2-6: U.S. Hotel Co-Branded Credit Cards: By Hotel, Network/Association, Rewards and Issuer, 2015
Chapter 3: Airline Guest, Frequent Flyer, and Hotel Guest Analysis
Why care about airline co-brands?
The power of frequent flyers
Table 3-1: Domestic Round Trips in the Past Year: Any Travel, Business Travel, Personal/Vacation Travel by Travel Frequency and HH Income, 2015
Table 3-2: International Round Trips in the Past Year: Any Travel, Business Travel, Personal/Vacation Travel by Travel Frequency and HH Income, 2015
The power of frequent flyer programs: income
The power of frequent flyer programs: loyalty
Table 3-3: Frequent Flyer Members by Airline Program and HH Income, 2015
Table 3-4: Frequent Flyer Member Last Round Trip by Airline Program and Airline Flown: Business/Personal and Business-Only, 2015
Tracking hotel visitor affluence
Table 3-5: Domestic Hotel Stay in Past 12 Months: By Hotel Brand, 2015
Chapter 4: Co-Branded Credit Card Case Studies
Amazon.com Rewards Visa Card
Table 4-1: Adults 18+ Who Ordered from Amazon in Past 3 Months, 2015
Table 4-2: Amazon.com Rewards Visa Signature Card Incentives, Rewards and Other Features, 2015
Mobile app
To compete against 5% Back Card
BuyPower MasterCard/GM Extended Family Card
Differentiation between the cards
Differentiation, among its competitors
Table 4-3: GM’s BuyPower MasterCard, Rewards and Other Features, 2015
Table 4-4: GM’s Extended Family Card, Rewards and Other Features, 2015
Mobile and online
Name change
Carnival World MasterCard
Table 4-5: The Carnival Cruise Traveler, 2015
Points translation
Rewards longevity
Differentiation, among its competitors
Table 4-6: Cruise Travel Frequency in Past Three Years, 2015
Graph 4-1: The Carnival Cruise Traveler: Amount Spent on Las Cruise, 2015
Table 4-7: The Carnival World MasterCard, Rewards and Other Features, 2015
Mobile and online
Citi Hilton HHonors Visa Signature Card
Table 4-8: Hilton Use in Past 12 Months: Any, Personal and Business, 2015
Rewards differentiator
Even more benefits
The fine print
Table 4-9: Citi Hilton HHonors Visa Signature Card Incentives, Rewards and Other Features, 2015
Mobile and online
Citi Hilton HHonors Reserve Card
Give me the Gold!
So what’s it mean to a consumer?
Some fine print
Table 4-10: Citi Hilton HHonors Reserve Card Incentives, Rewards and Other Features, 2015
The Hilton HHonors Reward Program
Ralphs rewards plus Visa Card
Rewards differentiation: private label loyalty
Table 4-11: Kroger Supermarket Chain Brands Shopped in Past 4 Weeks: Six Major Brands, 2015
Even more benefits
The website
An interesting benefit targeting families
Table 4-12: Ralphs rewards plus Visa Card Incentives, Rewards and Other Features, 2015
Mobile and online
Ritz-Carlton Rewards Credit Card
Table 4-13: Ritz-Carlton Domestic Travel Guest in Past 12 Months, 2015
The Black Card is marketing in action
The only downside
Automatic Gold Elite Status
Competition from IHG and Fairmont Visa
Table 4-14: Ritz-Carlton Rewards Credit Card Incentives, Rewards and Other Features, 2015
Ritz-Carlton Rewards Program
Ritz-Carlton Rewards Program Elite Levels
Table 4-15: Ritz-Carlton Rewards Credit Card Tiers and Features, 2015
The fine print: member activity
Mobile and online
Sam’s Club MasterCard
Table 4-16: Sam’s Club vs. Costco: Visit Frequency in Past Month, 2015
Rewards limitations
Table 4-17: Sam’s Club MasterCard, Rewards and Other Features, 2015
Mobile and online
Southwest Airlines Rapid Rewards Plus and Rapid Rewards Premiere Visa Cards
Differing tiers, differing rewards
Differentiation
Transparency suffers, but a nice surprise awaits
Companion Pass Status: travel for two, anyone?
Table 4-18: Southwest Airlines Rapid Rewards Plus and Rapid Rewards Premiere Visa Cards, Tiers and Features, 2015
Rapid Rewards
Not all is perfect
Points for eating and shopping, too
A-List Status
Mobile and online
Virgin Atlantic World Elite MasterCard
Other benefits
What’s the big deal?
Foreign transaction fee
Table 4-19: Virgin Atlantic World Elite Black MasterCard, Rewards and Other Features, 2015
Table 4-20: Virgin Atlantic World Elite White MasterCard, Rewards and Other Features, 2015
Flying Club Rewards
Mobile and online
Walmart MasterCard
Table 4-21: Shopped at Walmart in past 4 Weeks, Any and 3+ Times, 2015
Rewards and benefits
Table 4-22: Walmart MasterCard Incentives, Rewards and Other Features, 2015
Mobile and online
Wyndham Rewards Visa Card
Table 4-23: Wyndham Hotels Domestic Travel Guest in Past 12 Months, 2015
Table 4-24: Wyndham Rewards Visa Card Incentives, Rewards and Other Features, 2015
Table 4-25: Wyndham Rewards Visa Card With No Annual Fee, Rewards and Other Features, 2015
Mobile and online
Wyndham Rewards
Chapter 5: Card Association Co-branded Strategies
American Express
Value proposition
Challenges
Operating segments
Special services and programs abound
Rewards cards and loyalty programs are the name of the game
Membership Rewards
Rewards expense and discount rate trends
Table 5-1: American Express: Cardholder Rewards, Cardholder Rewards and Marketing Expense vs. Billed Business: 2012-2014
Own-branded credit cards
Movement to category-based rewards tiers
SimplyCash gets a reboot
Business Gold follows
Multi-tender loyalty foray
Addressing the airport lounge issue
Co-branded credit cards
Co-branded moves
Co-branded card portfolio provides more card options
Oh, no, not Costco!
Table 5-2: American Express Consumer and Small Business Own-Brand and Co-Branded Credit Card Programs, 2015
Delta signed—for a price
Third-party co-branded relationships
Table 5-3: American Express U.S. Third-Party Co-Branded Credit Card Programs, 2015
Co-branded spend
Table 5-4: American Express U.S. Card Services Billed Business and Co-branded Billed Business, 2014
MasterCard
Back in the co-branded game
Table 5-5: U.S. General-Purpose Credit Card/Charge Card Purchase Value by Operating Network: Actual and Indexed Growth, 2007-2014
Recent traction and momentum
More than 4 in 10 co-branded partners go with MasterCard
Table 5-6: MasterCard U.S. Co-Branded Credit Card Programs, by Card Segment, 2015
Visa
Tiered consumer credit platform
Market share leader
Catching up with the affluent
Table 5-7: General-Purpose Credit Card Usage by Association/Networks: Percent Change by HH Income, 2009 vs. 2015
Costco helps Visa take affluent strategy a step further
Pushing ubiquitous acceptance
Co-branded moves
Visa leads co-branded purchase value and partnerships
Table 5-8: Visa U.S. Co-Branded Credit Card Programs by Card Segment, 2015
Chapter 6: Co-branded and Affinity Credit Card Issuer Strategies
Alliance Data Systems
Competitive positioning
Co-branded moves
Table 6-1: Alliance Data Systems: Co-Branded Credit Card Partners, 2015
Performance analysis
Robust volume, receivables and account growth
Table 6-2: Alliance Data Systems Private Label/Co-branded Loans, Purchase Value and Accounts,2009-2014
Co-branded share
Table 6-3: Alliance Data Systems, Purchase Value and Loans Outstanding by Major Retail Partner, 2014
Bank of America
Own-brand strategy: casting a broad, stable net
Rewards for all but a handful of cards
And Preferred Rewards for all! Well, almost all . . .
Co-branded and affinity a strong suit
Strong continuity on the co-branded side
Streamlining the affinity side
Table 6-4: Bank of America Consumer and Business Own-Brand and Co-Branded Credit Card Programs,2015
Table 6-5: Bank of America Consumer and Business Affinity Credit Card Programs, 2015
Barclays
Co-branded credit card growth and trends
Co-branded card portfolio
Buying, then building the portfolio
Losses add up
But so do wins
Table 6-6: Barclay’s Consumer and Business Own-Brand and Co-Branded Credit Card Programs, 2015
US Airways, L.L. Bean and Upromise are largest accounts
Table 6-7: Barclays U.S. Co-branded Accounts, by Account Number and Total Receivables, 2015
Performance analysis
Table 6-8: Barclays Bank Delaware: Credit card Loans Outstanding, 2011-2014
Table 6-9: Barclays Bank Delaware: Financial Overview, 2014
Capital One Financial
Competitive positioning
Own-brand moves
Co-branded moves
Co-branded acquisitions and sales
HSBC deal adds co-branded and private label power
GM, Saks and AFL-CIO co-branded accounts stick
Going forward
Table 6-10: Capital One Consumer and Business Own-Brand and Co-Branded Credit Card Programs, 2015
Performance analysis
Table 6-11: Capital One Financial Corporation: U.S. Credit Card Purchase Value and Loans Outstanding,2011-2014
Citibank
Leaner, meaner and ready to expand again
Portfolio streamlining
Global synergy
Rewards strategy
Own-brand moves
ThankYou program
Simplicity Card
Double Cash
Citi Private Pass
Citi Price Rewind
Co-branded moves
Private label revitalization helps co-branded cards
American Airlines: the biggest airline co-branded program?
Costco win: looking past rate of return to the demographics
Best Buy co-branded and private label
Macy’s
Sears
Citi Hilton HHonors Reserve Visa Signature
Table 6-12: Citibank Consumer and Business Own-Brand and Co-Branded Credit Card Programs, 2015
Co-branded share
Figure 6-13: Citibank North American Card Purchase Value, Loans Outstanding and Accounts: Retail Services and Citi-Branded, 2010-2014
J.P. Morgan Chase
Card, transaction and new account leadership
Value proposition
Using the recession to create a healthier portfolio
And leaving recession card blues behind
Targeting the affluent
Developing and enhancing own-branded card lines and rewards
Harnessing digital
Co-brand: Focus on core portfolio
Table 6-14: J.P. Morgan Chase Consumer, Business and Government Own-Brand and Co-Branded Credit Card Programs, 2015
A heavy brand partner skew to affluence
Table 6-15: Chase Co-branded Card Hotel Brands: Domestic Travel Guest in Past 12 Months, by Brand and Demographic, 2015
Table 6-16: Frequent Flyer Enrollment: Southwest Airlines and United Airlines, by Demographic, 2015
Synchrony Financial Services
Partner movement and segment growth
Wins, renewals and losses
Growth strategies: grow private label share of partner sales and grow partners
Co-branded moves
Table 6-17: Synchrony Financial Services: Major Private Label/Co-branded Retail Partners, 2015
The co-branded angle
Amazon, QVC and Belk
Major co-branded accounts
PayPal
Key private label and co-branded credit card retailer accounts
Table 6-18: Synchrony Financial Credit Card Trust Loan Receivables and Account Share, 2015
Big-box retail formats lead Retail Card receivables
Table 6-19: Synchrony Financial Private Label Credit Card Receivables by Retail Partner, Q1 2015
Performance analysis
Positive loan growth and account growth trends
Purchase volume gains suggest success with retail partners
Accounts getting bigger?
Table 6-20: Synchrony Financial Retail Card Purchase Value, Receivables and Partners, 2011-2014 and H1 2014-2015
Table 6-21: Synchrony Financial Services Synchrony Financial Purchase Value, Loan Receivables, Accounts and Revenue, by Segment, 2011-2014
Table 6-22: Synchrony Financial Services Purchase Value, Loan Receivables, Accounts and Revenue, by Segment, H1 2014 vs. H1 2015
U.S. Bank
Own-branded credit card trends
Targeting a broad audience, with an affluent skew
FlexPerks taps American Express
But downstream products maintained
Co-branded strength and stability
Airline and retail emphasis
Co-branded moves
MasterCard sneaks another into Visa henhouse
Table 6-23: U.S. Bank Consumer and Business Own-Brand and Co-Branded Credit Card Programs/Cards,2015
Wells Fargo
Own-brand and co-branded moves
Table 6-24: Wells Fargo: Consumer Credit Card Metrics, 2014
Table 6-25: Wells Fargo Own-Brand and Co-branded Cards, 2015
Chapter 7: General-Purpose Credit Card Consumer Usage Trends
Introduction
Credit card usage trends over time
Percentage of credit card users on the upswing
General-purpose card usage growth lags department store card usage growth
Graph 7-1: All Credit Card, General-Purpose Credit Card and Department Store Credit Card Usage Penetration, 2006-2015
General-purpose credit card usage trends: 2006 to 2015
Pre-recession usage peak remains a long way off
Only American Express increases usage penetration
Graph 7-2: General-Purpose Credit Card Usage Penetration by Card Association/Network, 2006-2015
MasterCard turnaround underway?
Table 7-1: General-Purpose Credit Card Usage Penetration by Card Association: Percent Change,2006-2015
General-purpose credit card usage frequency trends: 2006-2015
Graph 7-3: Credit Card Usage Frequency Share: General-Purpose Credit Cards, 2006-2015
General-purpose credit cards in wallet: trends over time
Graph 7-4: General-Purpose Credit Cards: User Share by Number of Cards in Wallet, 2006-2015
Credit card usage by HH income
American Express maintains dominance among higher-income card users
Graph 7-5: General-Purpose Credit Card Association/Networks: User Share by HH Income, 2015
But American Express’ grip on the affluent is slipping
Table 7-2: General-Purpose Credit Card Use Among $150K+ Consumers: By Association/Networks,2009-2015
Table 7-3: General-Purpose Credit Card Use by Association/Networks: Percent Change in Usage, by HH Income, 2009-2015
American Express
Table 7-4: American Express Credit Card: User Share by HH Income, 2015
Discover
Table 7-5: Discover Credit Card: User Share by HH Income, 2015
MasterCard
Table 7-6: MasterCard Credit Card: User Share by HH Income, 2015
Visa
Table 7-7: Visa Credit Card: User Share by HH Income, 2015
Chapter 8: Co-branded and Affinity Credit Card Consumer Usage Trends
Rewards/affiliation credit card usage trends: 2011 to 2015
Introduction and explanation
Co-brand/rewards credit card usage outstrips general-purpose credit cards
Cash back takes the lead
Table 8-1: Rewards/Affiliation Credit Card Usage: All Adults, by Co-brand/Rewards Type, 2011-2015
Table 8-2: Rewards/Affiliation Credit Card Usage: General-Purpose Credit Card Users by Co-brand/Rewards Type, 2011-2015
American Express rewards/affiliation credit card usage trending
Table 8-3: American Express Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type,2011-2015
Discover rewards/affiliation credit card usage trending
Table 8-4: Discover Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type, 2011-2015
MasterCard rewards/affiliation credit card usage trending
Riding the cash back wave?
Table 8-5: MasterCard Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type, 2011-2015
Visa co-brand/rewards credit card usage trending
Co-brand/rewards usage share gains across the board
Table 8-6: Visa Rewards/Affiliation Credit Card Usage by Affiliation/Reward Type, 2011-2015
Rewards/affiliation credit card usage, by demographic
By HH income: affluent dominate hotel and airline
Graph 8-1: General-Purpose and Rewards/Affiliation Credit Card Usage Share: By Rewards/Affiliation and HH Income, 2015
By generation and gender: generation shift in play?
Table 8-7: General-Purpose and Rewards/Affiliation Credit Card Usage: By Rewards/Affiliation and Generation by Gender, 2015
Airline card usage and usage share
Graph 8-2: Credit Cards with Airline Affiliation, by Association/Networks: Usage and Usage Share by HH Income, 2015
Cash back card usage and usage share
Graph 8-3: Credit Cards with Cash Back Rewards by Association/Networks: Usage and Usage Share by HH Income, 2015
Rewards/affiliation credit card usage, by household investments
Table 8-8: Credit Card Usage by Card Association and Rewards/Affiliation Type: Among Investors with $100K+ in Assets, by Asset Type, 2015
Co-branded/affinity credit card usage
Introduction and context
More than 5 in 10 general-purpose credit card users have co-brand/affinity card
Graph 8-4: General-Purpose and Co-Brand/Affinity Credit Card Usage and Active Usage, 2015
Visa co-brand/affinity usage penetration leads other card associations
Graph 8-5: General-Purpose and Co-Brand/Affinity Credit Card Usage and Active Usage: By Card Association, 2015
Graph 8-6: General-Purpose and Co-Brand/Affinity Credit Indexed Card Usage and Active Usage: By Card Association, 2015
But co-brand/affinity card penetration by association is a close call
Graph 8-7: General-Purpose and Co-Brand/Affinity Credit Indexed Usage: Relative Indexing by Card Association, 2015
Proprietary survey results affirm co-brand/affinity demographic skew
Table 8-9: General-Purpose and Co-Brand/Affinity Credit Card Usage Penetration: By Demographic,2015
MasterCard and Visa co-branded users skew younger, with Visa drawing younger affluent
Table 8-10: American Express and MasterCard and Visa Co-Brand/Affinity Usage and Active Usage: By Demographic, 2015
15 co-brand/affinity card types: usage and usage in past 30 days
Co-branded penetration more than three times higher than affinity
Retail cards most prevalent
Affinity-based card types play minor but important role
Graph 8-8: Co-branded and Affinity Credit Card Usage and Active Usage: By 15 Card Types, 2015
Retail and airline cards promise stronger engagement?
Affinity cards have lower engagement?
Table 8-11: Co-branded and Affinity Credit Card Usage Ratio: By 15 Card Types, 2015
Co-branded cards attract higher incomes; affinity cards attract more males
Graph 8-9: Co-branded vs. Affinity Credit Card Usage Share: By Gender, Age and HH Income, 2015
Chapter 9: Co-Brand/Affinity Credit Card Application Influencers
Co-brand/affinity card signup influencers
Introduction
The big picture
No annual fee and rewards help drive sign-up decision
Mobile app not so much
Graph 9-1: Co-Branded Credit Card Features: Sign-Up Influencers, 2015
The Details
Ways to earn extra points/rewards: demographic analysis
Table 9-1: Ways to Earn Extra Points/Rewards: Co-branded Card Sign-Up Influencers by Demographic, 2015
Rewards program features: demographic analysis
Table 9-2: Rewards Program Features: Co-branded Card Sign-Up Influencers by Demographic, 2015
Types of discounts: demographic analysis
Table 9-3: Types of Discounts: Co-branded Card Sign-Up Influencers by Demographic, 2015
Types of special perks: demographic analysis
Table 9-4: Types of Special Perks and Services: Co-branded Card Sign-Up Influencers by Demographic,2015
Types of travel benefits: demographic analysis
Table 9-5: Types of Travel Benefits: Co-branded Card Sign-Up Influencers by Demographic, 2015
Appendix
Methodology
Consumer survey methodology
Explanations
Report table interpretation
Terms and definitions




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