The Co-Branding Boom

Co-branding of credit cards began in the United States in 1986. In that year, Continental Airlines and the Marine Midland Bank launched the first co-branding program. Later, General Motors and Shell launched a massive co-branding program that is still among one of the largest in the market today.

Richard Rolfe reports in the latest issue of European Card Review that European banks followed quickly with their own co-branding programs. Ford Motor Co. and Barclay followed suit. Co-branding has occurred in waves in the UK, but has been very patchy in the rest of Europe. It is estimated that there were about 75 million co-branded and affinity cards in the U.S. at the end of last year. These cards accounted for about 12 percent of all co-branded credit cards worldwide, but 25 percent of all expenditures on bank credit cards. The average monthly spending on U.S. co-branded cards was $452 vs. $239 on standard credit cards. Rolfe attributes much of the growth in co-branded cards in the U.S. and Europe to "private label conversions," under which retailers re-brand their in-house credit programs with Visa or MasterCard.