What is a Private Label Card? What are the benefits? (2023)

With more and more payment methods emerging, it is necessary to be up to date. Thus, the private label card appears as an opportunity to generate exclusivity and loyalty.

When used correctly, this model benefits both the company that uses it and its clients.

For the stores, it is an opportunity to strengthen their brand and expand their customer base.

Want to learn more? Just read this article to the end!

private label card

What is a private label card?

A private label card is a credit card issued by a company other than the traditional flags and that can only be used in the store network that issued it.

Essentially, the main purpose of these private label cards is for a company to maintain its own brand image through a credit card that is accepted in its own store chains or networks. 

Private label programs partner with a financial institution to manage the card program for the company. These institutions are mainly responsible for:

  • Issuing cards
  • Credit financing
  • Collecting payments from customers. 

So, since the financial institution is responsible for the underwriting process and issuing the private label credit cards, they provide exactly the same levels of security and transparency as standard credit or debit cards. 

Private label cards: Advantages

In return, private label card users receive:

  • Rewards
  • Discounts
  • Promotional financing 
  • Other benefits 

In exchange for using the cards for company-exclusive payments. 

Thus, private label credit cards can provide opportunities for your customers to earn loyalty points that can be used for discounts on future purchases, increasing customer loyalty and your LTV.

Advantages of private label cards for businesses

As mentioned earlier in this article, private label cards provide benefits for both customers and businesses.

Check out the main ones below:

1) Increased LTV

LTV or Lifetime value is an estimate of the total net profit a customer will generate during his lifetime for your company.

With private label cards, customers have more advantages in buying more from the same store on a recurring basis (to accumulate more benefits), therefore, the LTV tends to increase when this strategy is well applied.

2) Brand strengthening

The private label card doesn’t have a traditional flag and can be customized with the brand’s logo and visual identity.

Therefore, there is a generation of value transmitted to the client and, consequently, greater brand consolidation.

3) Customer loyalty

If the benefits are competitive, the tendency is that customers will buy more and more at the same store (after all, this way they can accumulate more advantages).

In this way, the private label card increases customer loyalty.

4) Increase in the average ticket

Since the purchases will not compromise the credit limit of the traditional card, the tendency is that the clients will buy more and more.

With a new exclusive limit to be used in a single store, it is expected that people will object less to purchases. 

5) Greater power of attraction

Imagine that a client is going to buy a product that costs the same price in two different stores, but in one of them he has the option to buy with a private label card with all the other advantages mentioned in this text. 

Which one do you think he will choose?

The private label card, when correctly implemented, is a powerful differential to attract new customers.

private label card

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