Co-branded cards are banking products with additional benefits. Review of co-branded credit cards What are co-brand bonuses
For about 10 years, in order to attract new customers, as well as to stimulate non-cash payments on credit cards, Russian banks have been issuing co-branded (co-branded, joint) payment cards. They differ from other cards both in options (the ability to receive discounts, benefits, bonuses or gifts from a bank partner) and in appearance (the presence of a partner company logo).
Co-branding (co-brand) cards: concept and classification
Co-branded cards are a joint product of the issuing financial institution and its partner (airline, mobile operator, etc.), combining the functions of banking and discount plastic. Such cards allow their holders to receive certain bonuses (discounts) when purchasing goods from the bank’s partner companies.
The issue of joint “plastic” helps the bank retain old and attract new customers, increase the average check amount for non-cash payments with a bank card, and helps its partner increase sales volumes. Bank partners, most often, are large brands - air carriers, mobile operators, fuel corporations and retail chains, and less often - catering establishments, travel companies, real estate agencies and car dealerships.
Co-branding cards can be either credit or debit; they are also classified by the industry in which the issuing bank partners operate. There are 4 main categories of joint cards: cellular co-brands (offers from mobile operators), airline co-brands (products from airlines and airports), fuel co-brands and co-brand projects from retail chains.
Are co-branded cards profitable?
It is almost impossible to assess the benefits of using co-branded cards in general, since the conditions for their issuance and servicing, as well as the amount of bonuses entitled to the holder, differ in each specific joint project.
Naturally, fuel co-brands are of interest to Russians who constantly “travel” around the country on work issues, and airline co-brands are of interest to clients who frequently fly flights of the corresponding company abroad, but with cards that allow you to receive discounts and bonuses in retail chains, everything is not so simple. Firstly, the cost of servicing such co-branded cards can be significantly higher than the fee for using classic “plastic”, which in some way minimizes the bonuses received from the partner bank. Secondly, knowing that bonuses will be awarded for purchases, cardholders unknowingly spend more in stores than they originally expected.
It should also be taken into account that accumulating bonuses on co-branded cards with a credit limit is not the best idea, because interest is charged on the money spent if you do not repay the debt to the bank within the grace period.
Debit bank cards with bonuses are safer and more profitable for the client than co-branded credit cards, but in any case, only clients with high plastic turnover receive real benefits from participating in joint projects.
A co-branded card is a card that is issued by the bank jointly with a partner company. They have been on the Russian market for more than 10 years and have recently become increasingly popular. In essence, these are ordinary plastic cards, however, when using them, the client may have access to additional discounts and bonuses when paying for goods and services.
Today, almost everyone can choose one based on their needs - it could be a card with discounts and bonuses for travel enthusiasts, for motorists, for users of certain telecom operators, etc.
Banks are actively promoting such cards on the market (especially credit cards), because they act as a way to increase loyalty. In addition, according to statistics, the turnover of co-branded cards exceeds that of regular ones. For example, Sberbank’s turnover on joint cards with Aeroflot is on average 1.6 times higher, and Alfa Bank’s is 1.8 times higher.
According to MasterCard, in Europe 20% of the total volume of cards are co-branded, in the USA - up to 50%. Russia is still lagging behind in this indicator, however, this creates great scope for the development of this market.
The industry-wide structure of the co-bred card market is also different. In the world, the most popular programs are in the retail field (60%), much less popular are joint projects with airlines (10%), as well as with gas stations and mobile operators. In Russia, the most common and popular are airline co-brands.
Co-branded cards for travel lovers
The essence of such cards is as follows: when paying non-cash for goods and services for a set amount (on average 30-50 rubles), the client is credited with miles, which can be exchanged for free airline tickets or upgraded service class, i.e. buy a business class ticket at the price of economy class. Also, almost all banks award welcome bonuses (from 500 miles for Sberbank and Alfa Bank, Gazprombank, URALSIB to 2000-3000 miles for CitiBank, SMP BANK). Such maps may be of interest to those who travel a lot.
Aeroflot has the most developed network of partners, including Sberbank, Gazprombank, Alfa Bank, Russian Standard, CitiBank, SMP BANK and URALSIB Bank. The conditions for accruing miles under this program are generally similar for all banks; miles are awarded for every 30 rubles spent on the card:
- Sberbank and Alfa Bank, SMP BANK - 1-1.5 miles;
- "Russian Standard" - from 1.5 to 6 miles;
- CitiBank – 1 mile;
- "Gazprombank" - 1-2 miles;
- "URALSIB" - 1.25 -1.75 miles.
The number of miles accrued depends on the card category (“gold” or “standard”). SMP BANK also credits 200 miles for account balances over 100 thousand rubles.
By the way, recently, under the Aeroflot Bonus program, miles can be spent not only on flights, but also on hotel stays, car rentals, magazine subscriptions, and goods in partner stores.
In addition to Aeroflot, the opportunity to accumulate miles together with Russian banks is also offered by TRANSAERO (such cards are available from Rosbank, Gazprombank, VTB24, Promsvyazbank, etc.), S7 Airlines (UniCredit, Alfa-Bank) ), British Airways (VTB24).
You can save money using cards not only for air travel, but also for train travel. After all, their cost in Russia is often in no way inferior to air transport.
While many banks cooperate with airlines, only VTB24 provides such an opportunity for railways. When issuing a VTB 24 Russian Railways card, the client becomes a participant in the Russian Railways Bonus program. When paying for purchases, the client receives 500 premium welcome points; 1 point for every 20 rubles. It is worth noting that the conditions on the card are not yet very favorable - a train ticket can cost an order of magnitude more than an airplane ticket. For example, to travel on a train in a compartment car on the Moscow-St. Petersburg route, you need at least 5,400 miles, which corresponds to spending 108 thousand rubles.
When choosing a co-branded card, it is worth assessing the feasibility of its design. You need to compare your monthly spending on the card with the cost of air tickets in miles, and take into account the cost of its annual maintenance. Thus, the minimum cost of a bonus ticket at Aeroflot is 15,000 miles, which corresponds to spending on the card of 450 thousand rubles. With a “golden” card, the costs will be lower, but the cost of annual maintenance will be several times higher (up to 6-9 thousand rubles). Therefore, such cards are designed for people with above-average income.
At the same time, accumulated miles may be expired, provided that the card holder does not fly on airline flights or does not pay with the card. In order to purchase a bonus ticket, you need not only to spend money, but also to fly with the airline for two years in order to have so-called qualifying miles on your account.
The disadvantages also include the higher cost of servicing a co-branded card (by 100-200 rubles). It is worth considering that taxes and fees will need to be paid in cash.
It is also important to find out whether miles are awarded for all purchases or only for ticket purchases. In the latter case, the points will accumulate for quite a long time.
Avid tourists can also apply for Raiffeisen Travel Cards from Raiffeisen Bank and RSB Travel from Russian Standard.
Raiffeisen Travel Card is a joint card of the bank and the service booking portal iGlobe.ru. You can earn 1 mile for every 30 rubles spent. and up to 15 miles for every 48 rubles spent on the site. Miles can be exchanged not only for air tickets, but also for car rentals, transfer orders, and hotel bookings.
The RSB Travel package includes two cards - MasterCard and American Express, attached to one account. Points that are awarded on cards can be used to reimburse expenses for transactions made at airlines, hotels, car rental points, as well as with tour operators and travel agents.
Co-branded cards for shopping lovers
By analogy with the experience of the development of the global market, in the near future in Russia we can expect an expansion of the share of co-branded cards in the retail market. These are joint cards with shops, supermarkets and department stores. Co-branded shopping cards operate as follows: when paying for goods and services, the card accumulates bonuses that can be exchanged for discounts or purchases. Another option is to provide discounts on the card at partner stores.
In Russia, such credit cards have not yet become widespread. Among the bank's partner companies are, for example, M.Video (Alfa Bank card), IKEA, Stockmann (Citibank card), MEGA (Credit Europe Bank), TSUM (bank from Russian Standard), Auchan (“Credit Europe Bank”), “Snow Queen” (“Rusfinance Bank”), etc. With such cards, 1-2% of the purchase amount is credited to a bonus account; in the future, points can be exchanged for purchases.
There are also so-called club cards on the market, with which you can get a discount from a network of partner companies. Among them, for example, women-oriented Cosmopolitan cards from Alfa Bank and ELLE-Raiffeisenbank or the Men's Card (developed together with MAXIM magazine) from Alfa Bank, which provide discounts of up to 30% in companies , aimed at female and male audiences.
Also in Russia there are several joint offers with the Malina bonus system, which has gained wide popularity in Moscow and St. Petersburg. The program’s partners are beauty salons, restaurant and cafe chains, gas stations, and pharmacies. Co-branded Malina credit cards are issued, in particular, by Raiffeisenbank and Russian Standard. According to banking programs, points are credited to the client’s account, which can later be exchanged for points from the Raspberry catalog. For example, in “Russian Standard” you are awarded 10 points for every 100 rubles spent.
Maps for motorists
All card offers for motorists can be divided into several types - these are cards with cash-back and those providing discounts at gas stations. Sometimes banks offer an additional package of emergency roadside assistance (for example, gasoline delivery, car towing, legal assistance, taxi). This package is provided on the cards “LUKOIL-Petrocommerce”, “AvtoKarta” from “UniCredit Bank”, and the “RosinterBank – AvtoKarta77” card.
The cash back amount depends on the card and is 2% (on a card from UniCredit Bank) or 3% (on an auto card from Otkritie Bank) when making purchases at gas stations.
With the Gazprombank-Gazpromneft card, bonuses are awarded for purchases at gas stations (gasoline or groceries). They can be spent at gas stations at the rate of 10 bonuses = 1 ruble.
If you pay at a gas station with a Neste Oil credit card from CitiBank, you will receive a 20 kopeck discount. per liter of gasoline.
Other cards
Another type of card co-brands are joint cards of banks and mobile operators. Today on the market there are cards with operators: MTS (Sberbank), Beeline (Alfa Bank) and Megafon (Citibank). For purchases with such cards, the user receives bonus points, which can be exchanged for payment for the services of a cellular operator or goods that are provided for in the bonus program.
We can also identify atypical co-brands aimed at a narrow audience. These are, in particular, fan cards that allow you to save on attending sporting events. For example, “Russian Standard” UNICS and FIFA cards.
Also, a number of banks issue a transport “travel card” for payments in public transport and savings on travel (only in the Moscow metro). Today Alfa Bank, Bank of Moscow and Avangard have such cards.
Another original card is “Odnoklassniki” from TKS Bank. For every ruble spent, the user is awarded 1 OK, which can be spent on the social network.
Among the unique cards is a card from Credit Europe Bank for fans of the Ferrari brand, which provides free access to the Scuderia Ferrari Community club, and also provides a 15% discount in the online store of Ferrari products.
This is a product that combines all the features of a credit card and the benefits of a discount card. Cardholders can use borrowed funds and receive significant discounts, all kinds of bonuses and gifts from bank partners.
If we talk about visual features, co-branded cards contain logos not only of the payment system and the issuing bank, but also of the partner company.
Such cooperation helps credit institutions attract new clients, retain old ones and stimulate non-cash payments, and partner companies increase sales volumes.
Earn miles
Many large banks cooperate with airlines. For example, Aeroflot credit cards are issued by Sberbank, Citibank, Uralsib, Alfa-Bank, SMP Bank, and Russian Standard Bank.
How it works? When a customer makes purchases, a certain number of miles are credited to their member account. Miles are also given for each flight on the airline's planes (at Alfa-Bank and Citibank - 500 miles each), and at Nomos-Bank they are given for birthdays.
The terms of accrual in banks are different, but most often for every 30 rubles spent with a credit card, 1 mile is added. Almost all banks count only non-cash transactions, but there are exceptions: with Czech Airlines credit cards from Nomos Bank you can also receive miles when withdrawing cash.
As a rule, the bonus account is replenished when the card is opened. Thus, with the classic Russian Standard credit card “Aeroflot American Express” the client is credited with 1000 welcome miles upon the first purchase, and with the “golden” credit card “Aeroflot-Citibank” - 2000 miles upon opening.
For the accumulated miles, you are given the opportunity to take a free flight, exchange a low-class ticket for a higher one, or receive the services of any program partners.
Holders of co-branded cards are often offered various additional services: the ability to choose a seat on the plane, priority when booking, insurance, etc.
Receive bonuses and discounts
Many banks issue cards together with well-known brands. For example, when paying with a Citibank Stockmann City credit card, the client receives 1% of the purchase amount on a bonus account. Accumulated bonuses can be spent on any goods in the Stockmann shopping center. In addition, cardholders receive a discount of up to 20%.
Approximately the same scheme applies to co-branded cards of Alfa-Bank “M.Video-Bonus” and Tatfondbank “DOMO - Tatfondbank”.
Increasingly, banks are issuing cards jointly with telecom operators. The most famous are MTS credit cards offered by Sberbank, Raiffeisenbank, Citibank and Russian Standard Bank. The peculiarity of such credit cards is that you receive bonuses for purchases on the card, which can be spent on calls and other rewards within the MTS network.
Similar conditions for co-branded cards “Megafon” (Citibank, Renaissance Credit) and “Beeline” (Alfa-Bank).
Women & Men
Some banks focus separately on “women’s” and “men’s” co-branded cards. For example, the Alfa-Bank Cosmopolitan credit card is aimed at modern women - with its help you can receive discounts and gifts in many beauty salons, cafes, shops, fitness clubs and other fashionable places. Moreover, a standard-sized credit card comes with a small Mini-card, which you can use to pay, but you cannot withdraw cash from an ATM.
Since the beginning of the 2000s, the banking sector in Russia has become one of the most highly competitive, which is reflected, among other things, in the introduction by domestic banks of the best world practices in order to offer their clients more profitable and interesting conditions. Even large state-owned financial corporations, such as Sberbank and VTB, actively entered into competition for retail consumers with other banks that were noticeably inferior to them in terms of assets, but were much more client-oriented. One of the improvements in financial performance in the retail segment was the implementation of successful co-branding projects with well-known companies operating in completely different areas of business.
Co-branding cards complement the capabilities of standard “plastic” cards by participating on favorable terms in the loyalty systems of the selected company or alliance. - these are credit or debit (payment) cards, usually having a special design that combines logos and branding of project partners. The development of the market for co-branded bank cards began with the launch of joint projects by Western banks with leading airline alliances. In our country, the history of co-branded bank cards goes back only 10-15 years, since the appearance of a joint product of the Russian subsidiary of Citibank with the Lufthansa airline (Miles&More), as well as an Aeroflot project with several domestic banks (Aeroflot-Bonus).
From a technical point of view, such cards are no different from ordinary VISA or MasterCard of the selected category, but they give their clients various privileges from the project partner. In the case of airlines, this usually involves awarding additional bonus miles for purchases on the card, and not just for purchasing flight tickets, the opportunity to upgrade the class of service or use comfortable airport lounges. Servicing co-branded cards is usually a little more expensive than standard conditions at the same bank, but this is more than offset by bonuses for active use. In most cases, co-branded debit cards “return” a larger percentage of purchases than cash back cards, which return a portion of the purchase amount in cash to the card’s account.
Like any other co-marketing tool, the issuance of joint cards is beneficial to all parties to the project: banks earn additional commissions for conducting card transactions, interest on the credit limits used; partner companies increase sales, increase their brand awareness and awareness of the target audience about goods and services, and customers receive additional rewards for the daily use of the card. However, the increase in the number of joint banking products has led to a sharp increase in the number of unsuccessful projects, which indicates the need for detailed, careful study of all the details in order to create a product that is truly interesting for the consumer. Let's consider the Russian experience in issuing co-branded cards and the history of the development of this type of banking product in our country.
Planes come first, shopping comes later...
As we have already noted, the first co-branded cards of Sberbank and many other credit institutions were issued jointly with major air carriers. The reason for this was not only global experience, but also the characteristic features of an impressive part of air passengers - fairly wealthy, active people from large cities, who often use their cards for non-cash payments for goods and services. But just 10 years ago, approximately 90% of cardholders had only one, salary card, and 90% of them used it to withdraw cash from ATMs. A nightmare for banks, earning their percentage from payment systems for non-cash payments! That is why this choice of partners was the only correct one, and co-branded Aeroflot Bonus cards, co-branded cards of S7 and other companies are still successfully issued today.
The real boom in joint projects began after 2005 against the backdrop of a general improvement in the economic situation and the transition of a significant part of the population of large cities to paying with plastic cards. Alfa Bank's co-branded card has become a constant companion for hundreds of thousands, because it was the country's largest private bank that became a real pioneer in the implementation of such projects. Co-branding cards for women with Cosmopolitan magazine, a joint project with the largest chain retailer X5 Retail Group, cooperation with M.Video, a charity project with the World Wildlife Fund WWF, expansion of cooperation with transport companies through Ural Airlines and other carriers - this is just a short list the bank's most famous projects in the middle of the last decade. An amazing variety of different partners and additional opportunities for the client - from bonuses for the purchase of products or equipment to the Earth Guardian badge from the largest international organization in the field of environmental protection.
Retailers' projects to issue co-branded cards were as varied as the results that were achieved. Some companies, for example, Euroset, even used their own network to issue and issue a joint Kukuruza card with the bank. We can also recall the rather successful experience of issuing Megacard - the Credit Europe Bank card for regular customers of stores in MEGA shopping centers. In grocery retail, companies have not been able to achieve significant success through co-branding cards, and today such cards are completely ousted from the market by more universal cash back cards, which sometimes provide the opportunity to select product categories with an increased return percentage. Perhaps another reason for this failure was the preference of the mass consumer to use the card to receive instant discounts on goods, rather than to accumulate points for savings in the future.
Co-branding cards have not bypassed the “big three” mobile operators - Megafon, MTS and Beeline. Part of the funds spent on purchasing goods and services using the card was transferred to the owner’s phone account, which made it possible to use communication services almost free of charge or receive a serious discount. Recently, cards for car enthusiasts have become very popular - co-branded cards of Gazprombank with the Gazprom Neft gas station network and the co-branded Likard card with Uralsib Bank provide an opportunity to save a lot on fuel, which is very important for any driver. There are also quite exotic projects, for example, special cards for fans of popular online games and regular users of online auctions. Thus, today the variety of types of co-branded cards is truly impressive.
A joint project means joint success: how to achieve this?
Banking statistics inexorably show that in the United States about half of all bank cards are co-branded, while in our country it is an order of magnitude less. There are several main reasons for this:
- low level of financial literacy of the population;
- preference for cash payments over non-cash ones;
- poorly developed infrastructure in the regions;
- low level of human mobility;
- Russians' distrust of the banking system;
- insignificant amount of expenses for many people;
- poor awareness of wide social groups about bank products.
In addition, banks themselves and their partners often make mistakes when forming a product and determining possible interest in us from various focus groups. For the success of the project, a deep understanding of your own target audience, the portrait of the clients of the selected bank, and the segmentation of various banking products is necessary. Co-branding cards are a tool for large businesses or simply well-known companies in their field (leaders in specific segments), whose brand is comparable in strength to the brand of the bank itself. The possibility of issuing joint cards between regional companies and local banks is theoretically possible, but in practice not much is known about the success of such projects. Of course, the banks themselves are unlikely to cooperate in this form, without a clear idea of increasing the client base and achieving a specific financial result in the near future.
In Russia, the development of the market for co-branded bank cards has significant growth potential. The joint task of business and the banking community is to realize these opportunities for the benefit of the Russian economy as a whole.
A modern bank card is not only a payment tool: with the right choice, it allows you to significantly save money and participate in partner promotions. Not long ago, in addition to classic debit and credit cards, co-branded cards appeared in the banking product lines, combining the advantages of two brands (the bank and the partner). Airlines often act as the latter: by paying for a trip with a card, you receive “miles”, which can later be exchanged for real air tickets. In this review, we will pay attention to banks from the Top 10 of the Banki.Ru rating and their offers for co-branded cards.
Travel with benefits
Of course, the most popular option for combining brands is a bank + an air carrier. This type of co-branded card is designed for those who fly frequently: it doesn’t matter whether you are a businessman or a traveler. Of the top ten Banki.Ru ratings, five banks cooperate with airlines. The most popular “air partner” is Aeroflot - joint cards with it are issued by VTB24, FC Otkritie Bank, Alfa-Bank, Gazprombank. S7 Airlines is friends with Promsvyazbank and Alfa-Bank.
Air ticket booking portals often act as partners of banks. Thus, Alfa-Bank merged with the online booking portal alfamiles.com, and Gazprombank - with the website iGlobe.ru (Gazprombank - Travel Miles card).
Co-branding technology is successfully used not only by airlines, but also by other carriers. The line of the Moscow Credit Bank includes a “Metro” card - the result of the synergy of the bank and the Moscow metro. Gazprombank also has a similar card - “Gazprombank - Troika”. In addition to basic operations (withdrawing cash, paying for purchases in stores and on the Internet), the card has the functionality of paying for travel in the Moscow metro. To enter the station, just tap your card on the yellow circle of the turnstile.
Russian Railways did not stand aside either: Alfa-Bank issued a Russian Railways card of three types (Standard, Gold, Platinum). By making purchases using it, you can participate in the Russian Railways Bonus program and accumulate points (in the future you can use them to buy tickets for long-distance trains and Sapsan). Annual card maintenance costs from 490 to 2990 rubles.
Charity trend
A unique co-brand was invented by VTB Bank of Moscow and the State Tretyakov Gallery. Using a debit or credit card of the co-brand of the gallery, bank and Visa payment system, its owners transfer 0.5% - 1% of the amount spent to the “Support Fund for the State Tretyakov Gallery”. In return, the bank provides the opportunity to choose a card design with a favorite work of Russian painting.
But that’s not all: VTB Bank of Moscow also teamed up with the Russian Orthodox Church in order to support the Program for the construction of 200 new churches in Moscow - this is how the “Gift to the Shrine” line of cards appeared. The bank guarantees the transfer of about 30 rubles to the fund. from 2 thousand spent with non-cash payment from a card. The cost of annual maintenance of such a card will range from 900 to 24,000 rubles.
The Rosselkhozbank is concerned about the fate of the Amur tigers - from each transaction on the Amur Tiger co-branded credit and debit card, the bank will transfer part of its income, namely 0.7%, to the Center for the Study and Conservation of the Amur Tiger Population.
Other banks also support charitable foundations. In cooperation between Alfa-Bank and the World Wildlife Fund, the WWF card appeared. 0.39% of the amount of each purchase is transferred to help preserve Amur tigers, fight poachers and create national parks. Servicing the card costs 490 rubles per year.
Sberbank’s product line includes the classic co-branded “Gift of Life” card, which appeared as a result of cooperation with the charitable foundation of the same name. From each purchase, Sberbank transfers part of the funds to the Gift of Life fund - they are sent to fight serious illnesses of children (0.3% of each purchase is paid by the bank, 0.3% is donated by the card owner). Half the cost of the first year of service also goes to the fund.
From sports to gas stations
Banks also have special offers for sports fans. For example, Promsvyazbank and the Moscow Marathon have released the “On the Move” sports card. Registration of this card allows you to save up to 40% on purchases in pharmacies and sports stores, receive 5% income on the balance of more than 5,000 rubles on the card, and also have Moscow Marathon privileges.
On the eve of the FIFA World Cup, Alfa-Bank offers to purchase a co-branded bank card of the same name. For every 50 rubles paid by card, its owner receives 1 point. Subsequently, points are exchanged for tickets to Championship matches.
Co-branding between banks and oil companies is also popular. Examples of such unions: Rosselkhozbank - Rosneft, Gazprombank - Gazpromneft with bank cards of the same name. Cardholders have the opportunity to participate in loyalty programs and receive discounts when refueling cars and purchasing goods at relevant gas stations.
In the wide range of Alfa-Bank co-branded cards, there was also a place for entertainment lovers: the World of Tanks card will appeal to fans of the game, and the children's card should appeal to parents. The advantages of the latter are CashBack of 5% of the check amount in cafes and restaurants and automatic savings for the child (you just need to set the percentage that will be transferred to the savings account from each purchase).
Conclusion
Having looked at the co-branding offers of the top ten banks, we come to the conclusion: tandems of banks and partners are very popular. Is it profitable for a client to purchase such a card? Of course, you need to weigh the pros and cons. A card can bring big bonuses in a certain area (sports, travel, charity), but at the same time have a high annual maintenance cost. Here, as in everything, you need to approach it wisely.