The news: Outdoor specialty retailer REI Co-op and Capital One launched the zero-annual-fee REI Co-op Mastercard, per a press release.
Why it’s worth watching: Despite only having a handful of co-brand portfolios, Capital One has extended its reach by targeting large retail brands like Saks and Walmart, which held about $10 billion in balances when it acquired the portfolio in 2019. Capital One moved further into retail by acquiring the Williams-Sonoma portfolio last July. It also plans to pilot a co-branded credit card with Kohl’s in 2023.
Retail portfolios are a popular co-brand category for issuers because they benefit from strong loyalty among shoppers and tend to have high repeat engagement. There were 51 retail co-brand portfolios in the US in July 2021, making it the most popular co-brand segment, according to Insider Intelligence estimates.
Our take: Capital One’s REI Co-op Mastercard seems to lack some of the digital features offered in other co-brands, but it will still likely appeal to a niche set of consumers.
The bigger picture: The co-brand card space is in flux.
Payment providers have launched and revamped cards, and big-name portfolios have changed hands as retailers look for issuers that can help them strengthen customer loyalty through new and improved perks. The movement highlights how issuers view co-brands as revenue and loyalty drivers.
This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.
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