Grab your wallet and take a look at your credit cards. How many of them are store credit cards? It's likely you have at least one.
That particular credit card is called a white label card. They are also sometimes called private label. These are basically company-branded credit cards.
Why would a company go through the trouble of creating its own credit card instead of just accepting a major credit card? In this article, we'll discuss the motivations and benefits of using a white label credit card as a payment processing solution.
What Is White Label Credit Card Processing?
If you are already accepting major credit cards, you utilize the merchant's backend processing and pay a fee to the merchant for every transaction. That same merchant may also have a white label credit card processing option.
That might sound counterintuitive - why would a merchant basically offer a competitor card? The white label card isn't a competitor. The merchant will still receive transaction fees. Also, a white label generally experiences an increase in volume for its customers, which means more fees for the merchant.
Using a white label credit card doesn't mean you can't accept major credit cards. Customers will still be able to use a major credit card or their store card.
From the business' side, a white label credit card extends its brand. But there are a number of other reasons to use a white label credit card.
Increase In Sales
Customers gravitate toward exclusivity. A branded store or company credit card has an exclusive appeal. It's also known that customers will spend more at a store when they have a store-branded credit card. TSYS 2016 U.S. Consumer Payment Study found that outside of using a major credit card, 56% of respondents use a store credit card.
When you run an ad campaign exclusively to your store card customers, there's a higher chance they'll buy vs. non-store card customers.
Increase In Customer Loyalty
A white label credit card allows you to splash branding all over it. Think of the Target store card with its bright red background and circle logo. Additionally, a branded credit card provides another point of connection with the customer. The credit card offers a particularly strong connection given its use as a payment option.
When customers apply for a store card, you'll have demographic information that isn't available with a major credit card. Customer demographics and purchases can be segmented. Once you know who spends the most, you can run targeted ad campaigns that reward those customers with exclusive discounts.
Campaigns can also target customers who haven't visited the store in a few weeks or months. The possibilities of how you can segment customers are virtually endless.
Allowing customers to pay using your store credit card provides them with one more payment option. Customers who might have used cash or a check can use their store credit card. Specifically for cash or check, the use of a store credit card is faster and less costly in labor.
Depending on the merchant, you might be able to save on cost with a white label credit card compared to major credit card fees.
Customers love discounts and rewards. When you push out a sale, you provide store card customers with exclusive discounts that aren't available to non-card carrying customers. These special discounts are one more way to boost sales.
Rewards programs are common with credit cards. Businesses using white label credit card processors can do the same. By offering exclusive discounts and rewards through your store credit card, you'll increase the bond with your customers.
Credit cards have great fraud reducing technology built into them. That same technology is available to store-branded credit cards. Compared to cash and checks, credit cards offer the ability to detect fraud in real-time.
What To Look For In A Merchant
Getting a white label credit card merchant account is similar to getting a major credit card merchant account except that you have a few more options, specifically around branding. Here are a few things to look for in a merchant:
Branding - How much branding are you allowed to have on the card?
Transaction Fees - How much are the transaction fees?
PCI Compliance - PCI stands for Payment Card Industry. Formally called PCI DSS, it is a set of security standards for credit card information that all companies using credit cards must comply with. There are four merchant levels (as defined by Visa) for PCI, which depend on volume.
DSS - DSS stands for Data Security Standard. You will often see it used as PCI DSS, as mentioned above.
If you are looking to add a new payment processing solution, a white label credit card can be a great payment option. There are a number of advantages to using a white label credit card, including an increase in sales and customer loyalty.