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Amazon Expanding Co-Branded Credit Card Offerings

2/11/2017
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Internet retailing giant Amazon.com made news in January 2017 with the launch of two new co-branded credit cards. While Amazon is already a major player in both markets – with a 27% share of 2016 internet retailing value sales in the UK and a 33% share in the US – this move is an excellent step for a company which continues to push into new services and opportunities that further expand its relationship with customers.

UK – Amazon Platinum MasterCard

In the UK – Europe’s largest personal credit card market by transaction value – Amazon launched the Amazon Platinum MasterCard issued by NewDay Ltd. The card comes after Amazon had previously eliminated a co-branded offering issued by MBNA back in 2014. The new card earns 1.5 points for every GBP2 on purchases at Amazon.co.uk, and one point for every GBP2 on purchases at other merchants. The card is also accompanied by a GBP10 gift card on sign-up.

US – Amazon Prime Rewards Visa Signature Card

In the US, the new Amazon Prime Rewards Visa Signature Card – issued by Chase – adds an additional tier for Prime subscribers above the existing Amazon Rewards Visa Signature Card. The new card offers the same 2% of purchase value back in points for purchases made at restaurants, gas stations and drugstores, while offering 1% back in points at all other merchants. The new card increases the earning rate for Amazon purchases from 3% to 5%, in line with the higher rate earned by the company’s store card offering, as well as that of competitors such as Target.

In addition to the rewards point earning rate boost, the new card – which is automatically issued to existing cardholders who are also Prime members – includes an improved sign-up bonus (USD70 rather than USD50 gift card) and is issued with a metal core similar to that in other Chase-issued cards such as the Chase Sapphire Reserve. Both US Amazon cards also offer a suite of Signature level features as well as a waiver of foreign transaction fees.

Positioning for the Future

Both new cards offer an intriguing opportunity to explore the ongoing development of both the UK and US co-branded landscape.

Amazon’s decision to launch a new co-branded card in the UK is particularly noteworthy as many banks have implemented significant cuts or outright eliminated their reward programmes in the wake of EU interchange fee caps. The rewards accrual rates on the new card are competitive, although slightly below those earned at a handful of UK retailers. The Brexit process also raises questions over whether the UK will remove interchange fee caps after leaving the EU, an action which could create a more attractive environment for co-branded and rewards cards in the future.

The debut of the Amazon Prime Rewards Visa Signature Card is well positioned to compete with other retailer-specific card offerings in the US such as those from Target and Costco. Amazon’s Prime programme already delivers significant value to the e-commerce giant, and the new card is well positioned to make Prime an even more attractive value proposition. Amazon’s decision to issue a metal card rather than the standard plastic card is also intriguing as it introduces yet another metal card to Chase’s portfolio – which already plays host to several metal cards, including the Sapphire Preferred, Sapphire Reserve, and the Marion Rewards Premier. While metal cards may appear to be a novelty, they are popular among consumers due to their status as a conversation piece. Some consumers also find a sense of satisfaction in using their weightier metal cards at the point of sale, developing a card preference which could prove important given the level of competition amongst card issuers in the US.

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