Abstract
This report examines the venerable world of private label and co-branded
retailer credit cards, and the market forces that are shaping this segment.
The vast majority of retailers have turned their programs over to third party
issuers, but these retailers' interest in payments as a sales enable and
relationship building tools have never been higher. And with more payment
vehicles and providers at their disposal, retailers increasingly focus on
developing their optimal payments strategy.
Highlights of the report include:
- Private label credit card programs owned and managed by retailers continue
to dwindle in number.
- Third party retail portfolio purchasers continue to grow, but contract
renegotiations and renewals may alter the competitive landscape.
- In-store competition among merchant-sponsored payment vehicles is
intensifying, as merchants deploy co-branded, private label, decouple debit.
- Emerging payment providers may be creating the next generation of networks
and applications for retail, posing a competitive risk to traditional private
label programs.
- The promise of credit for all is as enticing as it ever has been, and
retailers and lenders are responding by designing products designed to
evaluate consumer' s risk in a way that supports their funding any purchase
from that merchant; whether it is through a co-branded credit card,
proprietary card or at the transaction level.
Ken Paterson, Director of the Credit Advisory Service at Mercator Advisory
Group, and one of the report' s authors comments, "to the consumer, the private
label world is alive and well and in some ways, better than ever. To the
retailer, their branded accounts can now be part of a layered payments
strategy designed to maximize consumer purchasing opportunities. To the
issuer, the general purpose versus proprietary card war is over and the market
has found some degree of balance. As the smoke clears, consumers still want
access to easy credit and retailers still want to increase spend. In-store
credit was born out of this simple need, so while the economic pie may be
sliced up differently, roles have changed, and new players have come on board,
this is the core need to be addressed."
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