Why are co-branded credit cards suspended?

Why are co-branded credit cards suspended?

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Recently, many banks, including Bank of Communications and Changsha Bank, issued announcements about suspending the issuance of some co-branded credit cards, attracting market attention.

A co-branded credit card is a credit card jointly launched by a bank and a third party. Unlike ordinary credit cards issued independently by a bank, cardholders of a co-branded credit card can enjoy both bank activities and merchant promotion activities. Liang Si, a researcher at the Bank of China Research Institute, said that co-branded credit cards have several characteristics: First, the card purchase rate is higher. Since co-branded cards are jointly issued by banks and merchants, especially when merchants mainly promote co-branded credit cards for the purpose of attracting customers, it helps to lower the threshold for cardholders. Second, there are more discounts. Co-branded cardholders can enjoy benefits that ordinary credit cards do not have, such as double points, special discounts, waived annual fees and other benefits. Third, it is relatively easy to increase the quota. Co-branded credit cards are generally used more frequently and can help increase your credit limit.

In recent years, there has been a craze for cross-border co-branding in the credit card industry, covering different scenarios such as travel, tourism, and games. “Co-branded credit cards help achieve a win-win situation for banks, co-branded parties and other parties. By issuing co-branded credit cards, banks can expand the number of card issuances and increase revenue sources; while merchants can attract more consumers and increase sales through co-branded credit cards; consumption Consumers can enjoy more convenience and benefits when shopping, which not only improves consumers’ shopping experience, but also enhances their loyalty to banks and merchants. The co-branded credit card model achieves mutual benefit and win-win among the three parties.” Beijing Internet Finance Xu Zewei, secretary of the party committee and president of the industry association, said.

Why have many banks stopped issuing co-branded credit cards recently? Experts say market changes are an important factor. As the growth rate of the credit card market slows down and competition for existing credit cards becomes increasingly fierce, the issuance costs of co-branded credit cards are gradually rising. If issuance costs are high and cardholder activity, consumption limits, etc. fail to meet the bank’s profit requirements, the bank may choose to stop issuing credit cards to control costs.

Xu Zewei said that risk control is also an important reason why banks stop issuing co-branded credit cards. As a special credit card product, the issuance of co-branded credit cards requires cooperation between banks, merchants, institutions, etc., involving multiple fields and complex business processes. Therefore, out of considerations such as market risk resistance and partner stability, banks will choose to stop issuing some co-branded credit cards.

For cardholders, what should they do after the issuance of the co-branded credit card they already hold is suspended? In this regard, the relevant person in charge of Changsha Bank stated that due to business adjustments, some co-branded credit cards such as Changsha Bank’s JD Finance co-branded credit card have stopped issuance. If the above-mentioned co-branded credit card expires or needs to be replaced, Changsha Bank will issue a UnionPay standard platinum credit card based on the card holding status. In addition, relevant persons in charge of the credit card centers of many banks stated that if the issuance of co-branded credit cards is stopped, the banks will adjust users to other types of credit cards based on the cardholder’s situation, and unexpired co-branded credit cards can still be used.

In order to regulate the business behavior of co-branded credit cards, the former China Banking and Insurance Regulatory Commission and the People’s Bank of China issued the “Notice on Further Promoting the Standardized and Healthy Development of Credit Card Business”, which clearly required banking financial institutions to carefully and fully evaluate the matching degree between the positioning of co-branded units and credit card products.

Chen?, a senior analyst at Tianyancha Data Research Institute, said that as regulatory policies continue to tighten, joint-branded credit card affiliates will face more stringent compliance requirements. Banks that issue co-branded credit cards should set clear issuance standards, including the qualifications of the partners, the positioning of the co-branded card, etc., to ensure that the terms of the co-branded credit card are clear and clear.

Experts said that in order to prevent credit card risks caused by problems with partners, regulatory authorities should increase supervision in terms of standardization and transparency of credit card interest management and planning of bank-enterprise cooperation models. At the same time, experts suggest that banks need to improve their precise positioning and differentiated service levels. For example, accurately locate target customers and understand their consumption habits, needs and risk preferences. Through differentiated services, we provide customized credit card products and services to different customer groups to meet their individual needs. In addition, optimization and user experience need to be accelerated. For example, through technical means, such as mobile payment, intelligent customer service, etc., we can optimize the credit card application, use, repayment and other processes to improve the user experience.

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