Is Co-Branded Card Issuing Right For Your Business?

Co-branded card issuing is an effective way for businesses to integrate financial services into their existing value proposition or for growing FinTech companies to increase brand awareness. By adding your organisation’s logo to a payment card, you can offer your customers unique incentives while generating revenue and enhancing brand visibility.

With PayAlly’s co-branded card issuing services, it’s easy for businesses to incorporate financial products and services into their operations. Read on to learn more about co-branded card issuing and find out if it’s the right solution for your company.

What Is a Co-Branded Card?

Take a look at any of the payment cards in your wallet and you’ll probably notice that they have a card network logo, such as VISA or Mastercard somewhere on it, as well as branding from a bank or building society.

If you have a co-branded card, however, you’ll see another company logo alongside the Mastercard or VISA symbol.

A co-branded card is offered by businesses that want to deliver financial services and payment options to their customers by using an established card network. Essentially, the business adds its branding to an established financial product and tailors the terms and conditions to suit its target audience.

When you launch a co-branded card, cardholders will be able to use the card to make purchases from your business. However, a co-branded card can also be used to pay in-store or online, as well as being used at ATMs. If you have a co-branded Mastercard, for example, the card can be used anywhere that traditional Mastercards are accepted, which increases their applicability and makes them more attractive to cardholders.

Co-Branded Card Examples

If you collect air miles with a British Airways AMEX card or you pay for your shopping with a BNP Paribas Mastercard, then there’s a good chance you’re already using a co-branded card. In fact, there are endless examples of companies and retailers who are using co-brand cards to extend their operations.

From retailers and hotel chains to startup FinTechs and online payment firms, there are businesses across a variety of industries that are utilising co-branded card issuing to enhance their range of services.

What Types of Co-Brand Cards Are Available?

Virtually any type of payment card can be co-branded, so there are plenty of options to explore if you want to enhance your brand by introducing new financial products. For example, co-branded card issuing can be used to create:

Co-brand debit cards
Co-brand credit cards
Co-brand pre-paid cards

These payment cards work in exactly the same way as traditional debit, credit, and pre-paid cards with some minor alterations. Generally, co-brand cards provide cardholders with rewards, discounts, or incentives, usually when making a purchase from the partnering business.

So, if you run an eCommerce store and you launch a co-branded debit card, for example, you might offer a 2% discount every time a customer makes an online purchase using their co-branded card.

As well as co-brand debit, credit, and pre-paid cards, some businesses use co-branded expenses cards to enable their employees to pay for business expenditure out of company funds while still retaining control over corporate spending.

Additionally, charities and non-profit organisations may use co-branded cards to enable cardholders to donate to their organisation every time they use the card.

With a variety of co-brand card issuing solutions, there are many ways that businesses can utilise this service to streamline their management, broaden their market offering and engage their target audiences.

How Does Co-Brand Card Issuing Work?

If you want to launch co-brand cards with your business logo, you’ll need to work with a card issuer. A card issuer can be a bank or a financial solutions company, like PayAlly. A card issuer provides cards for cardholders to use but they also approve or reject the transaction when a cardholder uses the card to make a payment or withdraw funds.

Every time a payment card is used, a multi-agency process is undertaken, and card issuers play a critical role. Firstly, a merchant bank authenticates the card or transaction via the card scheme, before asking the card issuer to authorise it. The card issue will confirm the card is active and has sufficient funds to process the transaction before approving it. Then, the funds can be routed from the cardholder’s account to the merchant bank to complete the process.

As you can see, the multi-step process can be complicated, even though it only takes seconds to complete in reality! Due to this, companies rarely want to launch payment cards from scratch. Instead, it’s far easier (and more cost-effective) to co-branded with existing card schemes and utilise established payment processing services.

So, when you launch a co-brand card, you can determine what additional features that card will offer to its cardholders (such as rewards or discounts) and add your logo to the card itself but everything else is handled by established institutions and compliant processes that ensure optimal security and reliability.

For businesses, this streamlines the process of launching payment cards and ensures companies can offer a variety of financial products easily and efficiently.

What Are the Benefits of Co-Branded Card Issuing?

Co-branded cards are popular with consumers as they offer flexible payment options with the added benefit of brand-specific incentives, like rewards and discounts. However, co-brand card issuing is advantageous for businesses too, with benefits such as:

Varied Range of Cards

Co-brand card issuing allows you to launch debit, credit, or pre-paid cards, as well as employee expenses cards or even payroll cards. What’s more – you can use co-branded card issuing services to launch physical or virtual cards, so you can grow your business in any way you choose.

New Revenue Streams

Depending on the terms you agree to, you can generate new revenue streams from your co-brand cards. Cardholders may pay a small fee when using their card, for example, and, as a co-branding party, you can choose to generate revenue from these fees.

As well as creating new revenue streams, a co-brand payment card can also increase your company’s revenue by enticing customers to spend more with your business. When a cardholder can generate rewards by using the card, they’re more likely to choose your brand over a competitor, for example. This allows you to optimise a customer’s average spend, as well as generating revenue from each transaction.

Increased Brand Awareness

When your company’s logo is added to a payment card, you can be sure that you’ll benefit from increased brand awareness. After all, numerous other people will see your logo every time the card is used. As well as increasing brand visibility, this gives you the opportunity to showcase your brand alongside a well-known global financial brand, such as Mastercard or VISA.

Improved Retention Rates

The incentives you choose to offer can entice customers into using your services or purchasing your products more often. If a cardholder acquires points every time they use the card and these points can be redeemed at a later date, for example, they will be more likely to return to your store or website in the future, so that they can acquire and spend these points.

As a result, you can establish customer loyalty and improve your retention rates by launching co-branded cards that offer lucrative incentives for cardholders.

Access to the Financial Industry

As the financial services industry is so heavily regulated, it can be difficult for companies to establish themselves in the sector and secure a share of the market. From applying for costly scheme memberships to meeting the eligibility requirements for licencing, there are many hurdles to overcome if you try and go it alone.

With co-brand card issuing, however, you can avoid the complexities that often accompany the launch of a new financial product. As regulatory compliance and functionality is handled by your card issuer, you don’t have to get involved with the minutiae that often acts as a barrier. Instead, you can reap the rewards of having a payment card bearing your logo while avoiding the risk and burden of launching your own cards from scratch.

Global Reach

Wherever you’re located, technology gives you the opportunity to run your business on a global scale. To do this, however, you need to have the right solutions in place. Launching a payment card that can only be used in one jurisdiction or in a limited number of stores won’t be universally popular, for example.

By using a co-branded card and established card schemes, like Mastercard, you can ensure your brand has a global presence while providing cardholders with the flexibility and security they need.