What’s happening: Two major card issuers signed co-brand deals with popular consumer brands.
Capital One will take over BJ’s Wholesale Club’s credit card portfolio from Alliance Data Systems (ADS), per The Wall Street Journal.
JPMorgan will launch a co-brand card with Instacart, per Bloomberg.
Capital One’s opportunity: Capital One’s deal with BJ’s adds another popular brand to its co-brand mix—it brought in Williams Sonoma last year—and adds to the flurry of retail brands changing issuing partners as contracts come to an end. Last year, Gap moved its portfolio from Synchrony to Barclays, and Amazon is reportedly searching for an issuer to take over its portfolio from JPMorgan.
Instead of renewing contracts with current partners, retailers like BJ’s may be looking to work with issuers that offer distinct capabilities that can boost spending. Capital One, for example, offers strong rewards tied to ecommerce—a key focus for retailers during the pandemic. It offers a generous 5% cash back for online purchases for its Walmart co-brand program.
JPMorgan’s opportunity: Instacart’s US grocery sales are expected to climb 16% year over year (YoY) and surpass $30 billion in 2022, per eMarketer forecasts from Insider Intelligence. A co-brand lets JPMorgan tap into that growth and diversifies its co-brand portfolio, which is mostly focused on travel—though it does include Starbucks.
And with digital co-brands well-positioned for growth, JPMorgan can benefit from working with a digitally native brand like Instacart. The partnership can also help the issuer attract other digital brands to its co-brand business.
Related content: Check out “The Co-Brand Credit Card Report” to learn more about the state of the sector and strategies that issuers are using to tap growth.