Private-label credit card issuing still has plenty of room for growth, if Alliance Data Corp.'s recent wins among niche retailers are any indication.

Most credit card issuers' portfolios generally have remained stagnant or declined over the past few years as consumers backed away from racking up fresh debt. But during the same era, Dallas-based Alliance Data has notched a steady stream of new private-label credit card deals, driving up its total receivables by double digits.

It remains a relatively small player among giants, but Alliance Data's total receivables through April 30 rose 10.6%, to $5.2 billion from $4.7 billion a year earlier.

By comparison, retail titan Target Corp.'s total credit card receivables at the end of its first fiscal quarter on April 28 fell 6.3%, to $5.9 billion from $6.3 billion a year earlier, the firm announced May 16. Target previously searched for a buyer for its card portfolio, then took it off the block (see story).

Like many other card issuers, Alliance Data also is benefiting from significantly lower losses as the economy improves. Its charge-off rate through April 30 on uncollectible card loans was 5.3%, down 210 basis points from 7.4% a year earlier, while account delinquencies over the past year fell 70 basis points, to 3.8% from 4.5%.

The company cited new credit card deals and higher consumer spending on its cards as driving forces in its record first-quarter earnings announcement last month (see story).

Alliance Data continues to drive growth by adding new private-label card programs from niche retailers, demonstrating its ability to spot opportunities in relatively new and growing channels.

The firm on May 10 announced another such deal, this time to manage a new credit card program for Blue Nile, a fast-growing Seattle-based online diamond dealer.

Alliance Data will provide private-label credit and financing, which it will promote through direct mail, the Web and specifically through mobile devices, the firm said in a press release. The parties did not disclose the terms of the multiyear deal.

In another deal announced last month, Alliance Data agreed to buy the existing private-label credit card operations of Premier Designs Inc., including providing financing and order-processing services for the Irving, Texas-based jewelry retailer's sales force, which markets products in consumers' homes (see story).

If Alliance Data maintains such momentum in winning new business, it soon will join the ranks of larger private-label issuers and be a force to be reckoned with in bidding for larger retail card portfolios, Robert Hammer, CEO of credit card consultancy RK Hammer Associates, tells PaymentsSource.

"This is an operation that is no longer just a niche player," Hammer says. "Alliance Data is showing up on everyone's radar screens, and as their portfolios grow, from the transaction-processing standpoint, they are getting more and more efficient and lowering their costs."

While unlikely to compete for such "monster" private-label credit card portfolios as those of Home Depot Inc. and Target Corp., Alliance Data increasingly will be in the hunt for more competitive card programs, Hammer predicts.

"Alliance Data has something a lot of other issuers don't have–good deal-flow," he says. "They have built some great momentum with smaller retailers and are moving into a situation where they may begin to rack up even more significant growth if they stay on this path."

Alliance Data came into existence in 1996 when a group of venture capitalists, including payment-processing executives, merged JC Penney's transaction-services business with apparel specialist The Limited's private-label credit card bank.

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