What Is a Private-Label Credit Card and What Are Its Benefits?

what is a private label credit card

Omar Founder of OJ Digital Solutions

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Retail is a competitive arena. Businesses are always looking for ways to attract customers and have them return for more.

One effective strategy for many retailers is inviting customers to sign up for private-label credit cards. Research shows that private-label card purchase value has risen in the last few years, and experts expect the trend to continue.

Merchants can entice customers with the perks of their private-label credit cards, whether they sell products online or in a physical store.

If you’re a business owner or retailer wondering how to give your store a touch of novelty, consider offering private-label credit cards.

The question is: what is a private label credit card, and how will it help your business?

I can help you.

I created this guide to discuss everything you need to know about private-label credit cards. I’ll also show you the pros and cons of private-label credit cards to help you decide if they suit your business.

Let’s begin.

What Is a Private-Label Credit Card?

Have you ever shopped at a store and seen a salesperson offer credit cards or store cards to shoppers? The card the salesperson is offering is most likely a private-label credit card.

Also known as a white-label credit card, it is a store-branded credit card you can use at a specific retailer.

It works like a standard credit or debit card but doesn’t have a credit card network logo (Visa, Mastercard, etc.). Instead, it has the store’s branding, and the cardholder can only use it at that specific retailer.

Like typical credit cards, a private-label card is a tool for borrowing money.

A company offering private-label credits can encourage customers to buy expensive items or multiple products simultaneously because they don’t have to pay the total cost upfront. Financial institutions collect payment later.

The specific store can also offer promotional financing with low-interest rates, 0% interest, or deferred interest.

Others may offer an extension for the refund of unwanted purchases.

This strategy is excellent for people who frequent certain stores because their continued patronage allows them to earn rewards and enjoy discounts.

Some companies that offer private-label credit cards include Ann Taylor, Banana Republic, and American Airlines. Many restaurants, hotels, and fashion boutiques also offer private-label credit card programs.

How Do Private-Label Credit Cards Work?

A private-label credit card may have a store name, but the issuing bank manages the credit plan and payment collection.

Alliance Data Systems, Wells Fargo, TD Bank, Citi Retail Services, Comenity Bank, and Synchrony Financial are companies that issue private-label credit cards.

These third-party financial institutions help with card issuance, payment collection, and credit funding. They also focus on technology integration for digital assistance and mobile payments.

These financing partners also help assure cardholders and protect them from shady practices (like hidden fees) by the specific brand issuing the private-label card.

The third-party financial institution also shares profits from private-label credit card transactions with the retailer.

The system for private-label cards is similar to regular credit and debit cards. The financial institution charges interest on credit card balances and fees on late payments.

On the other hand, the retailer will avoid payment processing fees, which translates to more profits.

What Are the Benefits of Private-Label Credit Cards?

What Are the Benefits of Private-Label Credit Cards?

Starting a private-label card for your small business can help you earn your customer’s trust and loyalty. Here are some of the numerous benefits of private-label credit cards for businesses and shoppers.

Loyalty Rewards

Loyalty Rewards

Nothing sparks a shopper’s interest like the thought of rewards. Customer loyalty points and rewards send customers a message that they are valued, increasing customer retention.

Buyers are more likely to spend money with your store’s private-label credit card when making purchases allows them to earn rewards.

Brand Recognition


Private-label credit cards don’t have Visa or Mastercard logos like other credit cards. Instead, companies customize their card designs to highlight their brand.

A private-label credit card can help solidify your brand’s identity.

Better Deals and More Profits

Better Deals and More Profits

Spending money at your store is a no-brainer when offering perks like promotional financing and VIP features to incentivize customers.

When more people shop at your store, you’ll see the opportunity for more profit and can offer fantastic deals. Doing so would further encourage potential buyers to make purchases and increase customer retention. It’s a cycle that benefits both the seller and the customer.

What Are the Disadvantages of Private-Label Credit Cards?

Here are some challenges that come with private-label cards.

High Annual Percentage Rate

High Annual Percentage Rate

Card issues state the interest rate of a credit card as an annual rate or APR.

The average private-label credit card has a higher interest rate than non-retail credit cards. This issue won’t be significant if buyers pay the entire monthly balance. Doing so can even help people build a high credit score.

However, the high APR can be a real burden for those who can’t pay their balance in full every month.

Limited Usage

The main drawback of private-label cards is their restrictive usage.

Since customers can only use private-label cards at one store (the one retailer that issued the card), their use is somewhat limited compared to regular credit cards.

Deferred Payment

Deferred Payment

Deferred payment is a double-edged sword.

It can help customers save money if they pay off their purchase entirely by the end of the promotional period.

But, if they fail to meet payment deadlines, they pay more in deferred interest.

How To Start a Private-Label Credit Card

How To Start a Private-Label Credit Card

Consider these factors before starting a private-label credit card program for your business.


Prepare to abide by a long list of rules and regulations when you start a private-label card program. You must also consider data security and the staffing required to handle the extra work.


Carefully develop your credit card design, especially if your business is still in its early stages. You want a design that will last a long time.


Once you offer a private-label credit card to customers, the volume of inquiries and customer support requests will increase. Ensure you have a team capable of providing customer support.

You can approach banks that can serve as your credit card issuer once you’re ready to offer people a private-label credit card program.

What Are the Alternatives to Private-Label Credit Cards?

Here are options you can pursue if you’re not ready to launch a private-label credit card program.

Co-branded Credit Cards

Co-branded Credit Cards

What is a co-branded credit card, you ask?

Co-branded credit cards work like private-label cards. The difference is that two parties sponsor co-branded credit cards: 1) the retailer offering the co-branded credit card and 2) a bank or payment processing network like Visa, Mastercard, or American Express.

Co-branded credit cards bear the card network’s logo, hence the term “co-brand.” They are more versatile because people can use them at any store that accepts credit card payments.

Customers can still enjoy the rewards and privileges you offer with the co-branded credit card.

Loyalty or Rewards Cards

Loyalty or Rewards Cards

A loyalty or rewards card is adequate if your primary purpose is boosting brand recognition for your small business.

While a loyalty or rewards card won’t offer easy payment schemes, loyalty programs provide rewards for a customer’s continued patronage.

Your store card can give loyalty points every time a customer buys something from your store. The customer can use these points on a future purchase by exchanging them for other items in your store.

Customers also love rewards like discounts, freebies, and access to limited-edition products and members-only events. Be creative and innovative when developing your rewards program.

The best thing is you won’t need to partner with a bank and deal with the strict compliance regulations of private-label credit cards.

The Bottom Line

Branded card programs enhance your customers’ shopping experience. They help build customer loyalty and encourage repeat purchases.

Some of the perks you can offer with a private-label credit card are promotional financing, loyalty rewards, and discounts on future purchases.

You can give customers extended refund periods or allow product returns without receipts.

What’s crucial is to partner with a reputable credit card issuer. After all, you want to gain your customers’ trust and establish your brand as credible and reliable.

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