CardsFTW #30: Big Bank Co-Brands

Plus, dumb watches with smart payments

Last week was a big week in credit card news. It was hard to pick the most important item to start, but I will go with Wells Fargo’s latest foray to compete in the prime credit card space.

Wells Fargo isn’t known for its credit card business, even though it ranks as the number seven issuer (Nilson Report, February 2020). Wells Fargo slightly refreshed its current line-up of cards over the past few years. The only recent card launch of note was a co-brand card with last September, an okay offering.

The historical justification for the weak line-up was that Wells Fargo was so good at cross-selling its existing customers, it could get them into middle-market cards with little effort. But, of course, we all know that Wells Fargo was illicitly signing up customers for products, including credit cards. The bank now attempts to make a massive comeback in reputation and products under new CEO Charlie Scharf, who must show a new approach and brand to consumers. With a background at both Visa and JP Morgan Chase, Scharf is well-positioned to take on this task. An article from Bloomberg includes amazing recognition of the sorry state of Wells Fargo cards from Scharf:

“Our card propositions are not competitive.”

I like it. Accurate and to the point.

The first new card in what is promised to be a new card line is a good offering in the core cashback space. The new card will offer 2% cashback on all purchases with no annual fee, competing directly with Citi’s popular Double Cash card (which pays 2% only when you pay your bill on time) and Fidelity’s under-appreciated Rewards Visa. In addition, the new Wells Fargo Active Cash card will launch with a signup bonus, which is rare in this level of cashback card, and will have reasonable APRs, varying from 14.99 - 24.99%.

Wells Fargo Active Cash Card
Name Suggestion: “O. Wells”

The most significant change may be that the card doesn’t have a stagecoach on the front! It’s not very appealing as far as card design goes, but its utilitarian design matches its rewards.

The Bloomberg article also notes that Wells Fargo is seeking to grow its co-brand business. We’ve seen Wells attempt card relaunches before, like the Propel card refresh a few years back. Based on this first product, it looks like they may be figuring it out, but time will tell.

Citi’s New Cashback Card

Within days of the Wells Fargo announcement, Citibank announced a new cashback credit card offering of its own that appears aimed at popular cards like the Chase Freedom and Discover it 5% rotating category cashback cards. Citibank has a strong cashback card, including the aforementioned Citi Double Cash card. They also previously marketed a Citi Dividend Card that included rotating categories but is no longer available for applications.

Citi Custom Cash Mastercard
Who is this “Linda Walker"? Would “Johnny Cash” require royalty payments?

The new Citi Custom Cash Card card features a rewards rate of 5% each billing cycle in the single category where the user spends the most, up to a $500 limit (a $25 bonus). Unfortunately, there are limited eligible categories in the fine print, which I find very disappointing. So limited, I can list them here: restaurants, gas stations, grocery stores, select travel, select transit, select streaming services, drugstores, home improvement stores, fitness clubs, and live entertainment. Cardholders will also have to be wary of the phrase “select.” For example, “select travel” excludes campgrounds, “select transit” excludes bike rentals, and “select streaming” is a specified list that currently excludes things like Discovery+.

After hitting the limit in the top spend category and for spend in all other categories, users will earn 1% cashback. The card has no fee and average APRs between 13.99% and 23.99%.

There’s a lot of math involved to determine what the best card is for a particular user. (I miss WalletBoost!) The Citi Custom Cash Card sounded excellent initially, but lost its luster upon further digging. The categories for the 5% and the spend are pretty limited. I imagine many mass-affluent consumers will blow past that limit. A family of four can easily spend $500 on groceries each month.

The rewards rate is higher than other similar automated cash bonus cards. For example, the new Venmo card gives 3% cashback in limited categories (Dining & Nightlife, Travel, Bills & Utilities, Health & Beauty, Grocery, Gas, Transportation, Entertainment), but with a 2% rate in your second favorite category and a $10,000 annualized limit. If you use the Venmo card right, it maxes out at $300 to Citi’s $250.

Startup HMBradley offers a credit card with a 3% top category (no limits specified). An important caveat: the HMBradley card may use individual Merchant Category Codes (MCCs) to limit the size of the category spend. In comparison, the Venmo and Citibank cards use super categories that appear to comprise multiple MCCs. Like the Venmo card, the HMBradley card has a second category for 2% rewards. Unlike the Venmo and Citi cards, the HMBradley card has no per category spend limit, but it does have a $60 per year annual fee (waived the first year). (It also has a card replacement fee of $10, which I haven’t seen on a credit card in forever!)

Overall, this is a strong offering for the everyday consumer, but is not as great as it seems on the surface. Nevertheless, it is wonderful to see issuers innovating and trying new reward structures.

Amazon Card Business Out to Bid

Reuters reported that retail giant Amazon sent out a request for proposals for their co-branded open-loop credit card, which JP Morgan Chase currently offers. The Amazon Visa Card is an extremely popular card with a reported $50 billion in annual payments volume and an outstanding book of $15 billion in loans. Amazon is a savvy partner willing to rebid deals to ensure the absolute best pricing. Amazon currently works with Synchrony Financial on its private-label Amazon Prime Store Card and American Express on its Amazon Business American Express Card. It’s rare for a brand to work with multiple issuers, a situation that typically only arises when a merger results in overlapping deals.

Amazon Visa Card
Name Suggestion: M. Bezos

Given Amazon’s existing relationships, we can expect both American Express and Synchrony to bid for the business. Amazon is sure to drive a hard bargain, much like Costco did when switching to Citibank from American Express in 2016. According to Bloomberg, Chase is ready to walk away, as it should be. Chase is a disciplined organization with the leading credit card portfolio in the country. It does not need its Amazon relationship to make its credit card business a success.

The story is one of those pieces of news that is intriguing and very normal. Why wouldn’t Amazon put the business out to bid after 19 years with Chase? It’ll be much more exciting when we learn about a new partner. Maybe Wells Fargo will take it on!

Citibank Wants to Break Up with Macy’s

This news item took me some time to find details, but Citibank has issued a termination notice to Macy’s. Unfortunately, no major news source covered this (save Bloomberg terminal subscribers), but it is buried in Macy’s latest 10-Q.

Macy's Credit Card
Name Suggestion: Macy Parade

For historical context, Macy’s used to run its own credit card program (as did many major retailers like Nordstrom and Target) but was early in the move to sell its portfolio to a bank. Macy’s sold its private-label and co-branded credit card program to Citibank in 2005, with Citibank taking on servicing and lending.

We learn in the 10-Q that Citibank has the right to terminate its agreement if Macy’s sales decrease by more than 34% over the 2006-2007 reference period, which they did in the 12 months ending in February 2021. Accordingly, Citibank notified Macy’s on June 4th that it will terminate its program. The notice kicks off six months for a renegotiation, a repurchase of the agreement by Macy’s, or a transfer to another bank.

It’s unusual for a bank to fire a retailer, but Macy’s is no Amazon and is a shell of what it once was. To quote a colleague I discussed this with yesterday, “Wait–I thought Macy’s went out of business.”

I predict the Macy’s program will land with a smaller issuer. Maybe it’s an opportunity for one of the newer fintech entrants to land a traditional brand.

Deserve Dives Into Education Cards

Deserve is a later-stage startup that offers both direct-to-consumer cards targeted at students with limited or no credit history, as well as a credit cards-as-a-service platform for fintech and other companies looking to launch co-branded cards. Last week saw an announcement of their first major university brand: Notre Dame. (Apologies to their existing program with the New Jersey Institute of Technology. Go Highlanders!)

Notre Dame Credit Card
Credit where it’s due: Clashmore Mike is the Notre Dame Irish Terrier Mascot. Good one.

The Notre Dame Student and Pro cards share product features with the Deserve Student and Deserve Pro cards. This model is a straight branding play with no card product variances. It would be great to see cards like this include some of the more unique rewards, or features approaches that Cardless has been deploying with their sports teams cards. Maybe $1,000,000 in lifetime spend on a Notre Dame card gets you a Rudy-esque experience of running onto the field with the football team!

Deserve also has a new website promoting its program for universities at The college affinity approach is a page straight out of MBNA’s playbook. MBNA managed thousands of affinity programs, including for many educational institutions, before its $30B acquisition by Bank of America in 2003. Most of these were folded into other Bank of America programs over time (rest in peace, my Claremont McKenna College Alumni Association card).

What’s new about Deserve’s approach is two-fold. First, we live in a digital world that was just starting when MBNA was big. Second, cash flow underwriting leveraged by Deserve can provide a better approval experience to students. The draw of the alumni affinity is strong, although many major universities have co-brand programs with regional issuers (and some legacy MBNA programs survive).

I predict many upcoming announcements from Deserve here as smaller universities will want to get back into this potential revenue stream with a friendlier underwriting program and card like Deserve’s.

Just for Fun: More Wearable Payments

Filed under “using cards in a not-a-card form factor”: Timex announced a new wearables payments partnership with Chase, Visa, and Tappy. The new watches aren’t precisely smartwatches, in the sense of an Apple or Google watch. However, a set of Timex straps come with an embedded NFC payment chip you can program with a card token via your Timex Pay app.

Timex Pay
Good looking watch!

I love this. I love fun payment tools and have the old AMEX Jawbone strap around here somewhere (it doesn’t work anymore). Paying with a watch is really convenient in a way that even a phone isn’t. I also love Timex and watches in general, so it’s a winning situation all around.

If you’d like to contribute to the Timex Pay Watch Acquisition Fund, I accept Square Cash. Testing results will be published in an upcoming CardsFTW.


Thanks for reading CardsFTW, a weekly-ish newsletter about all things debit and credit. CardsFTW is written and curated by Matthew Goldman, Founder, and CEO at Vertical Finance, a challenger credit card startup. If you’re looking for insights into everyday payments beyond deal blogs, please subscribe for free at If you enjoyed this, please share it with a friend! Follow me on Twitter @magoldman.

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