Online retailer Overstock.com is teaming with MasterCard Worldwide and First National Bank of Omaha to issue a cobranded credit card.
Under the initiative, Overstock.com is waiving the $19.95 annual fee for its loyalty-rewards program and is providing up to 8% back in Club O Rewards Dollars on qualifying purchases. Loyalty-program members may use O Dollars to pay for purchases on Overstock.com.
As with other recently launched cobranded programs, the partners are seeking to boost transactions from the retailer’s best customers, which typically spend the most money and perceivably have the best credit, Ron Shevlin, Aite Group analyst, tells PaymentsSource.
“The driver is they are capitalizing on the existing loyalty program,” says Shevlin. “Those are the best customers who are already shopping at Overstock.com, and this [card program] is an opportunity for Overstock to better monetize that.”
And it bodes well for the issuer and MasterCard because it helps drive transaction volume. The card partners “also are capturing the economics around the loyalty program,” Shevlin notes.
Overstock.com hopes the card will generate more sales because of its loyalty offering, Jonathan Johnson, the company’s president, tells PaymentsSource. “We worked with our bank and looked at other programs out there and tried to offer as solid a program as we could,” he says.
With the Club O program, loyalty members have access to exclusive online-shopping events, free shipping and 5% back in Club O Rewards Dollars for Overstock.com purchases. Cobranded cardholders get an additional 3% for Overstock.com purchases; they receive 1% back in Rewards Dollars for all other purchases.
Overstock.com is promoting the card to existing customers via e-mail and by featuring it on its retail Website, a spokesperson says. The company expects to do more marketing in 2011.
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