What is a private label credit card?
Today, many retailers arent content just to sell merchandise, but are inviting customers to sign up for store cards, otherwise known as private label credit cards. Explore private label credit cards in greater depth with our simple guide. Understanding private label credit cards  Private label credit cards (sometimes referred to as white label credit cards) are store-brand cards that are intended to be used exclusively at a specific retailer. Managed by banks or commercial finance companies, private label credit cards dont have standard credit card logos (i.e. Visa, Mastercard) and in most cases, they cannot be used any other store than the brand where they were issued. In some cases, private credit cards may be described as co-branded. This means that the core benefits of the card can only be exploited at the issuing store, but the card itself can be used anywhere, like a normal credit or debit card. In the case of co-branded private label credit cards, the issuing bank/payment processor will be clearly marked on the face of the card. While private label credit cards are much more prevalent in the US than they are in the UK (according to recent research, the value of Americas private label credit card purchases hit $210 billion in 2018), they are a factor in the UK credit card landscape. For example, there are many different store cards or retail branded credit cards that customers can take advantage of in the UK market. Private label credit cards are run in collaboration with banks or third-party financial institutions. The third-party partner (or private label credit card provider) assists in several areas, including issuing, funding, and payment collection. Because private credit cards are managed by banks or financial institutions, they offer exactly the same level of security and transparency as standard-issue credit or debit cards. There are numerous benefits associated with private label credit cards. Most importantly, they allow retailers to offer more lenient terms (such as deferred payment) to customers than would otherwise be possible. This can help to encourage customers to spend more money at your store. In addition, private credit cards may give your customers the opportunity to earn loyalty points which can be used to gain discounts on future purchases, thereby increasing customer retention. In many cases, private label credit cards also offer VIP features, such as the ability to make returns without presenting a receipt. Private label credit cards for small businesses  Private label credit cards can be a great way to boost customer loyalty and encourage customers to buy from your store. If youre thinking about starting a private label credit card for your own retail business, there are a couple of things that you should consider before you get the ball rolling:  Compliance  There are a broad range of rules and regulations that youll need to abide by before youre able to offer private credit cards. Think about your security processes, as well as whether your accounting team is ready to handle the extra work. Branding  Many businesses switch up their branding as they grow, particularly when theyre still in the early stages. Its important for the design of your private label credit card for small business to last, so bear this in mind if youre considering a rebrand in the near future. Support  If something goes wrong, your customers are more likely to contact you, rather than the issuing bank, so youll need to have a team in place to assist with the increased volume of enquiries. Ultimately, you may find it easier and more effective to offer loyalty or reward cards. They arent so formal or exclusive as private label credit cards, but they can be a strong motivating factor to bring customers into your store. Plus, theres no need to partner with a bank  you can make them entirely by yourself with a printer and a graphic design software package. We can help  GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.