PUBLISHER: Packaged Facts | PRODUCT CODE: 1319875
PUBLISHER: Packaged Facts | PRODUCT CODE: 1319875
Packaged Facts, a leading provider of consumer-oriented market research and analysis, today announced the launch of its new report "Private Label Credit Cards in the U.S., 13th Edition," offering a deeply detailed analysis of the shifting strategies and emerging opportunities and challenges confronting private label card issuers and their merchant partners.
Rebounding from declining transaction volumes in 2018-2020, the private label credit card market experienced growth in both 2021 and 2022. Growth will continue through 2025 with private label credit card nominal purchase volume growing a total of 9.8% through 2025 and card outstandings growing a total of 9.7% during the period."
For the six largest private label credit card issuers (Synchrony Financial, Citibank's Citi Retail Services, Capital One, TD Bank, Bread Financial and Wells Fargo), purchase volume will total $339.9 billion in 2025 and card outstandings will reach $172.9 billion in 2025.
Revitalizing growth is coming to the payment segment from both medical credit cards and new credit bundlings providing small to mid-sized merchants private label credit cards and buy-now, pay-later (BNPL) financing through point-of-sale.
In the past five years, Buy-now, pay-later (BNPL) loans have offered buyers zero-interest short-term installment loans that have created windshear for both network-branded and private label credit cards. Packaged Facts estimates displacement of credit card purchase volume by BNPL totaled $143 billion in 2021 and will reach $279 billion in 2023.
CHAPTER 1: EXECUTIVE SUMMARY
SCOPE OF REPORT
REPORT METHODOLOGY
Context for Market Performance
Table 1-1. Consumer Interest in Applying for a Store Credit Card During the Holiday Season, 2018 -
2022 (%)
Table 1-2. Total Number, Value and Dollar Average of Private Label Credit Card Payments, 2015,
2018, and 2021 (number in billions; $ in trillions)
Key Challenges Facing the Private Label Credit Card Market
A Third of Consumers Regret Signing up for Private Label Credit Cards
Market Share Loss to BNPL
Rising Charge-Off Rates
Private Label Credit Card Interest Rates
Table 1-3. General Purpose Credit Card and PLCC Interest Rates, 2018 - 2022 (%)
Aggressive Regulation of Late Fees by the CFPB
Card Issuers Were Given a Late Fee Carve Out - That May Be Disappearing
New CFPB Late Fee Regulation Could Eliminate $9 Billion of Issuer Income
Late Fees Disproportionately Hit Subprime Borrowers
Late Fees are Single Largest Driver of Profitability for Monoline Private Label Issuers
Market Size and Growth
Table 1-4. Outstandings, Private Label Credit Cards, Largest Issuers, 2019 - 2022 ($ in billions)
Table 1-5. Purchase Volume, Private Label Credit Cards, Largest Issuers, 2019 - 2022 ($ in billions)
TOP PRIVATE LABEL CREDIT CARD ISSUERS
Bread Financial (formerly Alliance Data Systems)
Figure 1-1. Bread Financial: Full Year Credit Sales by Product, 2022 (%)
Capital One
Citi Retail Services
Synchrony Financial
TD Bank
Wells Fargo
Turnkey PLCC Platform is Central to Wells Fargo Strategy
CHAPTER 2: MARKET SIZE AND GROWTH
MARKET BACKGROUND
Private Label Credit Cards Were First Consumer Credit Products
Retailers Sell Credit Card Portfolios to Financial Services Firms
Major Retailer Benefits: Data and Loyalty
Major Cardholder Benefit: Buying Power
DRIVERS OF RETAIL AND PRIVATE LABEL CREDIT CARD PERFORMANCE
Growing the Market for Private Label Cards with New Products
Medical Credit Cards
Bread Financial and Wells Fargo Offer Medical Cards
Medical Private Label Credit Cards Help Consumers Address Large Deductibles
MARKET PERFORMANCE
Context for Market Performance
Pandemic, Supply Chain, and Inflation All Exert Negative Pressure on Retailers
PLCC Receivables Have Declined While Purchase Volume Has Grown Significantly
Table 2-1. Outstandings, Private Label Credit Card, Largest Issuers, 2019 - 2022 ($ in billions)
Table 2-2. Purchase Volume, Private Label Credit Cards, Largest Issuers, 2019 - 2022 ($ in billions)
Broad Retail Adoption of BNPL Poaches from Private Label Credit Cards
Retailers' Loyalty Programs Increasingly Separate from PLCC Enrollment
CHAPTER 3: PROFILES OF TOP PRIVATE LABEL CREDIT CARD ISSUERS
THE TOP ISSUERS
Table 3-1. Purchase Volume, Private Label Credit Cards, Largest Issuers 2019 - 2022 ($ in billions)
SYNCHRONY FINANCIAL
Overview
Table 3-2. Synchrony's Key Performance Metrics by Sales Vertical, 2022 ($ in billions)
Leveraging Synchrony's Bank for Lower Cost Funding
Despite Broad Range of Customers, Synchrony Dependent on its 5 Largest Programs
Dual Cards are Focus of Sales Development
Operating Segments Replaced by Industry Sales Platforms for Financial Reporting
Home & Auto
Figure 3-2. Mattress Firm 3% Rebate Platformed on Synchrony Store Card
Digital Vertical
Diversified & Value
Health & Wellness
CareCredit Drives New Partnerships and Transaction Volume
Roll-up of Specialized Human and Veterinary Care Benefits Synchrony
CareCredit is Driving Growth
CareCredit Cardholders Can Move to Longer Term Financing
Digital Merchants and Revitalizing Retail Category Bode Well for Synchrony
Synchrony's Expansion into BNPL
Table 3-4. Synchrony Financial, Receivables and Purchase Volume, 2019 - 2022 ($ in billions)
CITI RETAIL SERVICES
Overview
Table 3-5. Citi Retail Services, Private Label Credit Cards: Outstandings and Purchase Volume, 2019 -
2022 ($ in billions)
Activity and Acquisitions
New Business: Citi Pay Credit
Snapshot: Best Buy
Table 3-6. Best Buy, US Segment Performance, 2020 - 2022 ($ in billions)
Declining Revenue Tackled with New Business Lines and Loyalty Program Enhancements
New Business: Best Buy Health
Best Buy Loyalty Tiers Integrated with Store Credit Card Program
Best Buy Financing Available to Best Buy Cardholders
CAPITAL ONE
Overview
Table 3-7. Capital One Domestic Credit Cards: Purchase Volume and Outstandings and Purchase
Volume, 2020 - 2022 ($ in billions)
Table 3-8. Capital One Private Label Credit Cards: Purchase Volume and Outstandings, 2020 - 2022 ($
in billions)
Program Partners
Kohl's
BREAD FINANCIAL
Overview
Figure 3-3. Bread Financial: Full Year Credit Sales by Product, 2022 (%)
Bread's PLCC Portfolio is Increasingly Concentrated
Data Drives Loyalty Programs
Younger Consumers Use Mobile for Shopping and Stores for Buying
Bread Financial Rebrands Direct to Consumer Banking
Bread is Promoting is Branded Payment Products
New Credit Card - Bread Cashback American Express
BNPL - Bread Pay BNPL
Bread in POS Installment Loan Business
Figure 3-6. Bread Buy-Now, Pay-Later Installment Loans
Business Strategy
Table 3-9 Bread Financial Private Label Credit Card Purchase Volume and Loan Receivables, 2020 -
2022 ($ in billions)
An Evolving Client Base
Key Positioning: Primary Marketing, Loyalty, and Payment Services Provider
Other Competitive Strategies
Private Label Credit Card Partners
WELLS FARGO
Overview
Turnkey PLCC Platform is Central to Wells Fargo Strategy
Decline of PLCC Metrics, Followed by Rebound
Table 3-10. Wells Fargo, Purchase Volume and Receivables, 2019 - 2022 ($ in billions)
Six Turnkey PLCC Financing Solutions
TD BANK
Overview
Table 3-11. TD Bank, Purchase Volume and Receivables, 2019 - 2022 (USD$ in billions)
TD Bank Acquisitions and Extensions
Nordstrom
TD Bank's Largest Partner is Target
Figure 3-7. Target Revenue, 2019 - 2022 ($ in billions)
Other Partners
CHAPTER 4: PROFILES OF SELECTED PRIVATE LABEL CREDIT CARD AND LOYALTY PROGRAMS
AMERICAN EAGLE
Overview
American Eagle Sub-Brands Generating Profits
Positive Performance Build atop Previous Results
Real Rewards Loyalty
The App for Real Rewards
BEST BUY
Overview
Table 4-2. Best Buy, US Segment Performance, 2020 - 2022 ($ in billions)
Declining Revenue Tackled with New Business Lines and Loyalty Program Enhancements
Best Buy Health
Loyalty Tiers Integrated with Store Credit Card Program
Best Buy Financing Available to Best Buy Cardholders
Overview
Forever Rewarded Loyalty Program Only for Its Cardholders
HOME DEPOT
Overview
Table 4-3. Home Depot Net Sales Growth, 2018 - 2022 ($ in billions)
Home Depot Cautious About Sales Growth Momentum
Private Label Credit Cards
Table 4-4. Home Depot Private Label Credit Card Volume, 2020 - 2023 ($ in billions)
Home Depot Credit Card Promotions
Pro Xtra Credit Card
KOHL'S
Overview
Table 4-5. Kohl's Net Sales and Private Label Credit Card Revenue, 2020 - 2022 ($ in billions)
Strategic Focus
Kohl's and Sephora
Kohl's Loyalty Programs
Loyalty Built on Discounts and Frequent Communication
Rewards Program Drives Revenue
The Kohl's App: Driving Sales Lift
MACY'S
Overview
Off-Mall May Be Key for In-Store Growth
Digital Drives Sales as Omnichannel and Standalone Channel
Loyalty and Star Rewards
Macy's Private Labeled Credit Cards
TARGET
Overview
Figure 4-2. Target Annual Revenue, 2019 - 2022 ($ in billions)
The RedCard Juggernaut
Target Circle Brings Non-RedCard Shoppers into Marketing Engine
RedCard and Circle are in Tension
Table 4-7. Target Key Financials and PLCC Purchase Volume, 2020 - 2022 ($ in billions)
Circle Loyalty Program is Focus of Heavy Promotion
TD Bank Issues the Target RedCards
CHAPTER 5: PRIVATE LABEL CARD USAGE TRENDS
PRIVATE LABEL CREDIT CARD RECENTLY USED
Table 5-1. Gender of Private Label Credit Cardholders, 2023 (# and %)
Table 5-2. Highest Level of Education Completed, High School through Some College, Private Label
Credit Cardholders, 2023 (# and %)
PLCC Ownership by Higher Education Degree Holders
Table 5-3. Highest Level of Education Completed, College and Higher Levels of Education Degrees,
Private Label Credit Cardholders, 2023 (# and %)
Table 5-4. Private Label Credit Cards, Household Income of Cardholders, 2023 (% and #)
APPENDIX
TERMS AND DEFINITIONS