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Co-Branded Credit Cards/ How Does It Work?

First, How Does Co-Branded Credit Cards Works? A Co-brand card is a retail merchant credit card that works in partnership with a particular network processor. Co-brand Cards are branded with the logo of the particular retailer and the network processor. These types of cards when in use for making any purchases with the sponsoring merchants, card users earn discounts and rewards points.

co-branded cards

Co-Branded Card Break Down

Co-Branded Card relationship is an important part of a retailers business. They enable the retailer to issue both single-purpose cards and open loop credit cards to customers. Co-branded card relationships can be structured in a variety of means.

Co-Branded Cards Relationships and Card Processing

In order to issue a Co-branded Credit card, a retailer must partner with a financial institutions. Basically, the financial institutions is the retailers acquiring bank. This often makes the Co-branded card transactions process and the relationship to rely on the acquiring bank’s network processor. In other cases, the retailer chooses to work with the third-party credit card provider.

Generally, the network processor is the primary logo display on the Co-branded Credit card along with the retailer. American Express and Discover are two major companies that issue unique Co-branded card relationships. They have the capacity to serve both as credit issuing financial institution and the network processor. Other Co-branded card sponsors are Visa and MasterCard.

On the whole, in all transactions, the acquiring merchant bank works with the retailer to process any electronic payment card purchases made. If the Co-branded card relationships are not pleasant, acquiring banks can make the process to be simplified, specifically in cases of branded purchases, where the bank and retailer are the only two entities involved. If the merchant works with a third-party to issue credit cards, the third-party card issuer and Co-branded processor will be inclusive.

Co-Branded Cards Benefits

In order to establish a strong Co-branded card relationship, the retailer must work with any provider of their choice. Retail credit card issuance allows a merchant to offer customers many benefits. Customers receive a discount for using the card. They allow customers to accumulate points that can be used as discounts toward future purchases.

However, if a customer wants to apply for a merchant credit card they can be approved for either a single purpose card. Including store specific cards, or an open loop card. A single purpose card enables the customer to only use the card with the merchant. These cards come with a credit limit and offer customers the same standard rewards. They are not always visible Co-brand, however, they may still follow Co-brand transaction processes.

Although a customer gets approval for an open loop card, such as the one Southwest Airlines offers via Chase, he or she may use the card anywhere that it is accepted. Open loop card is generally the most visible Co-brand Cards. Since the include the network processors logo. The outsides merchants need to use the Co-branded processor and contact the card issuing financial institution for approval. The card issuing financial institution also manages the points accumulated by the users with the merchant.

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