Comperemedia’s Chief Insights Officer, Andrew Davidson is well known for sharing the latest insights on financial services products and marketing strategies/innovations on his LinkedIn, as an event speaker and as a host on Mintel’s Little Conversation podcast. In this bi-weekly recap, he will provide you with the latest news and insights happening in the financial services industry.
Here are the 5 things you need to know:
1. Capital One’s new look cards
Capital One has updated the design of its Platinum, Quicksilver and now Venture cards to create a unified look.
They aren’t completely the same but the chip is now on the left on all cards and the product name is below the chip, notably in the bottom half and left aligned. The font is also smaller.
In other words, the product name has become less prominent.
More unified:
- Enhancing the brand. By standardizing the design across its card offerings, Capital One strengthens its brand identity, making it more instantly recognizable to consumers.
- Holistic approach. The move reflects a more holistic approach by card issuers when it comes to thinking about the range of products in their portfolio and how they can serve diverse customer segments with a single relationship in mind.
2. AAA ramps up its grocery-focused card marketing
Best credit card for groceries? In a recent YouTube video ranking of the best credit cards for groceries, the AAA Daily Advantage Visa Signature Card from Bread Financial with 5% cash back on groceries and no annual fee came in at #2.
It was pipped to the post by Amex Blue Cash Preferred, which offers 6% back on groceries, but that card has a $95 annual fee. Marketing for the AAA card has jumped up recently, particularly on Paid Facebook and Instagram.
- Target: AAA members (although you don’t have to be a member to apply)
- 5% cash back at grocery stores
- 3% back on gas, EV charging, wholesale clubs, streaming, pharmacy, AAA purchases
- 1% back on other purchases
- $100 statement credit when you spend $1K in 90 days
- No annual fee-No foreign transaction fees
Seeing the opportunity:
- Escalation in grocery costs. Inflation is coming down but consumers are still feeling the pain. The average annual cost of groceries per household has increased by 27% over the past six years. This rise in costs has been particularly burdensome for low-income families, who spend nearly a third of their income on food, compared to just 8% for wealthier consumers.
- Time to shine. Consumers are looking for ways to alleviate the pressure from escalating grocery costs with many changing their behavior to find lower prices. It’s time for credit cards with a market-leading position on groceries to shine by stepping up and getting their message out. AAA is ramping up its grocery-focused marketing at a time when it can really help its members.
3. Communicating the Capital One – Walmart break up
In May, Capital One and Walmart ended their partnership following a dispute over customer service, which led to a lawsuit and ultimately a ruling by a New York judge that the agreement could be terminated.
Capital One will retain the card portfolio and has been informing cardholders through mail that their existing card will be replaced with a Capital One Quicksilver card, offering 1.5% cash back. Additionally, their rewards terms will change prior to receiving the new card. .
Source: Comperemedia Direct [08/01/2024 – 08/31/2024] as of 09/20/2024
It’s messy:
- Bad timing. In my post on AAA (above), I mentioned how consumers are still feeling the pain of high prices, particularly at grocery stores, despite the headline inflation rate coming down. Extra savings at grocery stores are needed now more than ever, so taking away the additional 5% cash back at Walmart is bad for customers and will have the knock-on effect of being bad for Capital One and for Walmart. It’s not that Quicksilver isn’t a competitive card but many of these cardholders will already have a general-use cash-back product, and it’s not the card they signed up for. These customers are going to need some love and quickly if they are going to feel positive about the situation. Notably, Capital One has set aside more than $800 million toward potential credit losses.
- One man’s misfortune is another man’s opportunity. It’s time for cards with market-leading positions on groceries to shine in the current environment, and there is an opportunity for those same products to capture disgruntled Walmart cardholders looking to maintain their 5% cash back. Walmart-backed One Finance will likely step in, but for now, there is a gap.
4. Affirm launches on Apple Pay
Following its news announcement that Apple Pay users in the US, with iOS 18, can pay over time online or in-app with Affirm, the company sent millions of emails promoting the service.
The email highlights six brands where you can make an Apple Pay/Affirm online purchase, demonstrating the breadth of acceptance across a range of retail categories. Affirm’s website lists close to 100 brands.
The six selected for marketing purposes were:
- Costco
- Best Buy
- ebay
- Lowe’s
- airbnb
- Nike
What does the email tell us that we don’t know already:
- Pivotal moment. This is a big moment for Affirm, and it’s a big push to leverage the Apple brand to reach as many Affirm users as possible. We are still tallying it up, but it already looks like more than 13 million so far, suggesting Affirm is wasting no time getting the message out to its 18 million+ active user base. We will see how much Apple subsequently puts its marketing weight behind the launch.
- Mobile sites and apps (not in-store). In the US, Apple Pay is predominantly used by younger consumers. Specifically, 40% of Generation Z and 35% of Millennials have used Apple Pay in the past year, compared to 22% of Generation X and just 8% of Baby Boomers which makes this a great partnership for Affirm BUT while still a big opportunity, use of Apple Pay online and in-app is a different question, and clearly this is where Apple wants to drive engagement for the win-win.
- In the fine print. Rates go from 0% (for pay in 4) to 36% with options based on the purchase amount. Affirm Cardholders can use their card to make the payment and non-Affirm cardholders will get a one-time virtual card issued by Cross River. Affirm Card has been growing rapidly (more than 1.2 million) – expect this to fuel further growth.
5. Best Western cards relaunched with new partners
Best Western Hotels has relaunched its two co-branded credit cards, with Mercury Financial and Visa subbing in for FNBO and Mastercard respectively, following the announcement in March.
- The Best Western Rewards Visa Signature Card has no annual fee, comes with a 40K points bonus and automatic Gold Elite Status.
- The Best Western Rewards Premium Visa Signature Card has an annual fee of $89 and comes with an 80K points bonus, automatic Platinum Elite Status and “up to” two free night awards each anniversary.
- Both cards have no foreign transaction fee.
New players in the mix:
- Mercury match-up. Best Western’s partnership with Mercury Financial, known for catering to consumers with fair credit, suggests a strategic shift in targeting a broader audience, including those looking to build or improve their credit. By aligning with Mercury, Best Western can tap into a segment that may have been underserved previously. The cards look cleaner, but the value prop is similar (although notably no intro BT), suggesting this is all about targeting.
- New co-brand landscape. The co-brand credit card landscape is getting increasingly competitive, as more companies seek out a piece of the pie. New players like Cardless and Imprint, along with Mercury, are finding new ways to offer co-branded products and compete with established co-brand issuers.
