Diving brief:
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Cardless, the American fintech that issues credit cards, has partnered with British football club Manchester United to provide co-branded credit cards to millions of fans of the sports club in the United States.
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The co-branded credit card will give users access to discounts on club merchandise, streaming and drinks on match days, as well as cash back on purchases.
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Many digital brands offer white-label cards to retain customers through loyalty programs while generating alternative revenue streams, industry analysts told Payments Dive.
Dive overview:
In an era where sports fandom has gone digital, sports organizations are exploring different avenues to retain and expand their support base and revenue streams.
“Manchester United have a huge fan base in the United States, often larger than most American teams themselves,” Cardless founder and chairman Michael Spelfogel told Payments Dive. “This product helps serve a market that was previously not occupied by traditional financial partners.”
Manchester United belongs to the Glazer familyAmerican investors who purchased a majority stake in the club in 2005. The football club went public on the stock exchange. New York Stock Exchange in 2012 and almost 34 million fans in the United States Although the club has not won any trophies on the field in recent years, it has managed to remain profitable thanks to a global fan base and sponsorship deals. The new card offering appears to be another ploy by what was once a legendary club to monetize its fan base.
“The co-branded credit card will initially be available to official Manchester United supporters clubs and will eventually be extended to all US supporters,” Spelfogel said. “The cardless system (also) allows virtual cards to be instantly provided upon approval.” Customers can earn 10% off official merchandise and earn points at bars and restaurants on game day.
Last year, Cardless partnered with NBA team the Cleveland Cavaliers to launch its credit cards as well. Cardless has “seen a remarkable increase in applications and interest through purely organic channels,” Spelfogel said. The company declined to disclose how many cards it has in circulation.
The San Francisco-based company raised $10 million in Series A funding round from Greycroft, Accomplice, Clocktower Ventures and Pear last year. First Electronic Bank, a Salt Lake City-based bank, issues Cardless white label cards.
Private label cards have lost users over the past year. In February 2020, there was 231.6 million private label accountscompared to 196.3 million in February 2021, a 15.4% year-over-year (YoY) decline, according to a report from Equifax.
Consumers – particularly the younger generation – are moving away from credit cards as they have found alternative credit options for large purchases, Ted Rossman, senior industry analyst at CreditCards.com, told Payments Dive.
As white label cards have seen their user base decline significantly, many digitally native companies like Instacart and DoorDash plan on rolling out their own credit cards.
“Customer retention is the main thing and it also helps reduce some costs like interchange fees and increase revenue through things like intermediation fees to attract new customers,” Rossman said.
Private label credit cards have struggled due to the COVID-19 pandemic. Consumers spent less and abandoned credit card transactions. Visa credit card spending volume is down approximately 9% and the volume of flows increased by 20%in the fourth quarter of 2020.
Although the use of white-label cards is declining, digital companies are considering issuing them to build customer loyalty, tap an alternative source of revenue and pair them with rewards programs, said Tim Zawacki, principal analyst at S&P Global Market Intelligence.
Cardless plans to launch a new white label card offering each month this year after seeing an increase in demand. “This will result in more new co-branding programs in 2021 than all other legacy issuers combined,” Spelfogel said.
