US affinity/co-branded card market examined

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By: Wise Marketer Staff |

Posted on May 29, 2007

Co-branding has entered its late adolescence and is a fixture of American marketing, and increasingly so of the global payments industry, with thousands of co-branded and affinity card programmes on offer, according to a new market analysis report available through ReportLinker.

The report, entitled 'Co-Branded and Affinity Credit Cards in the US', suggests that some 45% of the payment cards in the wallets of US consumers are co-branded or affinity cards.

Market balance
The overall co-branded card market is larger than the affinity market in terms of number of accounts and outstandings, although the number of affinity card programmes is significantly greater than the number of co-branded cards (because, the authors suggest, many affinity programmes tend to appeal to smaller numbers of consumers).

With more than three-quarters of US adults (which some estimates indicate is close to being the entire credit-worthy adult population) having at least one credit and debit card, co-branded and affinity card marketers are seeking to fashion programmes to attract new or under-penetrated consumer segments. As a result, the card industry is taking a new look at ethnic groups and at the affluent consumer. Even at the other end of the scale some are also addressing the needs the non-affluent and the unbanked.

Untapped segments?
In most segments (such as airlines and hotels) the main customer lists have been thoroughly mined already, and co-branders are now trying to create programmes that will capture the interest of consumers at significant life stages - for example: teens, college students, new drivers, engaged couples, young married couples, mature adults, and the elderly. Similarly they are also trying to craft programmes that focus on a lifestyle activity, a popular hobby, or a worthy cause.

Co-branded market size
The report focuses on the US market, in which the publisher estimates that by the end of 2006, between 30 and 60 million US consumers carried a total of over 320 million co-branded and affinity credit cards, up from the publisher's original estimate of 212.1 million in 2003. Consumers used their co-branded or affinity cards in at least 9.4 billion transactions, worth at least US$849 billion during 2006.

The report also provides an overview of the major market players, a survey of recent and ongoing litigation and regulation of the market, and details of the market share of some of the major card issuers, as well as growth and marketing trends and an examination of the latest co-branded products and technology, with some emphasis on contactless payment technology.

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