The Power of Credit Card Co-Branding in an Experience Economy

In case you haven’t been in an airport this year, Americans are traveling more than ever in 2023, with over 10 million Americans traveling abroad in June 2023 (up 20% year over year). If you traveled to Europe this summer, you might’ve noticed a few of them, with 2.7 million visiting the continent in the same month. American travelers want to experience what the world has to offer, and increasingly, many of them are utilizing co-branded credit card products to save money, access luxury experiences, and make their friends at home envious. These jetsetters are leveraging their card benefits and rewards in a whole new way, with the most popular leading to an increase in bookings. Card issuers can capitalize on this emerging trend by offering exclusive rewards while booking, or even just completing their day-to-day, to create loyal and profitable customers that keep this credit card “top of wallet”.

Co-branded cards were invented in 1986 when Continental Airlines and a bank, now a part of HSBC, launched a credit card together. Ever since, credit cards and airlines have fostered an ever-deepening co-dependence. Co-branded cards are so huge, that in June 2023, Delta CEO Ed Bastian claimed that 1% of the total US GDP was being charged on Delta credit cards. While airline cards will always be a co-brand mainstay, other travel verticals like hotels, cruise lines, and theme parks have successfully launched as well. Rakuten Advertising has been at the forefront of this from the beginning, having partnered with some of the biggest credit card issuers in the affiliate marketing space, including Chase, Citi, and Wells Fargo. Recently, Rakuten Advertising and Chase celebrated 22 years of partnership in the bank’s affiliate program.

What has evolved most is co-branded credit cards’ deepening importance in customer brand loyalty. Yes, while brand loyalty and recognition were the initial reason co-brands were invented, the customer-facing “perks” for holding and using the right card have never been more lucrative. For instance, the Chase World of Hyatt credit card offers cardmembers 2 elite nights towards status for every $5,000 they spend on the card- that means a big spender could earn top-tier status with Hyatt without ever stepping foot in a hotel! Or, Citi’s AAdvantage Platinum Select World Elite Mastercard offers 1 “Loyalty Point” per dollar towards American Airlines’ status levels, enabling their cardmembers to get closer to that next first-class upgrade.

Understanding what loyal audiences want from a co-branded card is critical, especially as the landscape continues to change. We’re seeing this shift happen in real-time, with the recent Delta Skymiles loyalty changes affecting both flyers and cardmembers (who could possibly like unlimited lounge access taken away after spending $550 on a credit card annual fee?). The government is beginning to take notice to, with the Credit Card Competition Act aiming to regulate the credit card industry further, by requiring banks to give merchants the choice of two different credit card processors for transactions. If enacted, it could turn the whole loyalty ecosystem on its head.

Additionally, the experience economy continues to be fueled by Gen Z’s disposable income, with Amex’s Gen Z research finding that 61% would be willing to treat themselves to a “special experience over a material possession.” Brands that have yet to launch a co-brand card, even outside of travel, may find that pairing valuable rewards and perks for Gen Z cardholders can drive sales and beat out competition, especially when done in an authentic manner. For example, Chase’s Marriott Bonvoy Boundless co-branded card often advertise 3 free nights at a Marriott, delivering on that need for a special experience for Gen Z. Promoting these types of cards through affiliate channels allows issuers access to groups like Gen Z, who lean towards researching a possible card for their wallet on comparison sites.

Overall, co-branded card partnerships will continue to evolve over time, but the positive impact that financial services, especially credit cards, will have on transforming brands’ perceptions  in the minds of their current and future customers is undeniable. Brands are now able to connect with their core audience every time they swipe their card more than ever before.

This blog was written by Manager, Client Services on our Financial Vertical team, Mark Jackson. For more from Mark, check out his recent blog on Bleisure Travel.