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May 18, 2022

Store Cards 101

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The value of store cards for merchants

Merchant-branded store cards, sometimes referred to as private label credit cards or simply store cards, have been a fixture at the checkout of major retailers for decades. These payment products offer unique and compelling value for merchants and their customers. It’s no accident that ten of the top eleven largest retailers in the United States use store cards to drive down costs while building deeper, more rewarding relationships with their best customers.

Merchants who offer a store card connect directly with an issuing bank, bypassing many of the participants found in traditional card processing. In doing so, they eliminate many costs associated with payment processing. For example, these transactions skip a merchant acquiring bank, don’t run on typical card network rails, and critically don’t pay standard interchange. These savings can result in as much as an 80% reduction in typical processing costs. 

Since merchants who offer a store card aren’t forced to pay interchange to fund loyalty programs for big banks, they can instead re-invest these savings into rewards for the customers who choose to pay with these products. This creates a virtuous cycle where the rewards drive deeper customer loyalty, ultimately leading to more frequent shopping trips and larger transaction amounts.

The value of store cards for customers

Customers find value in store cards in a number of ways. The rewards offered by merchants in exchange for using these products is typically much greater than what a customer might be able to earn with other payment types in their wallet. For example, the leading earn rate for a credit card from a big bank is 2% of spend. Merchants on the Tandym network all offer at least 5% in rewards on future purchases – more than double industry earn rates for general purpose credit cards!

Additionally, customers get access to more purchasing power with a store card. This credit line is separate from their “everyday” credit cards. For some customers, this separation helps them manage their spend in a more intuitive way.

Finally, some merchants offer additional benefits to store card users like early access to sales or new product releases. For the super-fans who typically take advantage of store cards, these perks carry meaningful value.

In the past, big banks only partnered with the largest retailers to offer these valuable products to end customers. Tandym is democratizing access to merchant-branded payments by making store cards available to merchants of any size. Even better, Tandym’s cutting-edge platform makes it possible for merchants to onboard and launch a store card and loyalty program in a matter of days with zero up-front fees.

Want to learn more? Contact a Tandym sales representative today!