Verizon, Synchrony bridge competitive gaps with a credit card
With Synchrony smarting over the loss of Walmart and Verizon facing heat from T-Mobile's payment app, a card partnership was a natural fit.
Verizon's first credit card, produced in conjunction with Synchrony, is expected to launch during the first half of 2020. In addition to vaulting Verizon into financial services and competing with T-Mobile and its T-Mobile Money service, the partnership signals how phone service providers have recast their mobile payment strategies after the failed Isis/Softcard wallet.
It is a "good play" for Synchrony, as it tries to overcome the loss of Walmart, said Brian Riley, director of card services for Mercator. "And for Verizon, they have to compete with the possible merger of T-Mobile and Sprint, which could give Verizon some concern in terms of being in the No. 1 spot."
Synchrony has done a lot of innovation in the past year with various cards, and getting Verizon is "a big enchilada" in terms of a partner, Riley said. "When you look at Verizon's space, it has millions of accounts and Synchrony has 80 million [active users]. So, when you look at the global side, you might as well have a good partner."
Verizon's move to establish its own credit card with Synchrony as the exclusive provider falls in line with other tech companies dabbling with financial products, such as T-Mobile's initiatives, Apple's launch of the Apple Card with Goldman Sachs, and Amazon's work with Uber in offering cash-back branded credit cards.
Earlier in the decade, most of the telcos found themselves in heated debates with payments providers over who had access and control of the secure element in phones that would hold consumer payment credentials.
The major telcos of AT&T Mobility, T-Mobile USA and Verizon even dove into a joint venture in developing what was originally called the Isis Mobile Wallet in 2012. That name eventually was changed to Softcard when the original name became symbolic of an Islamic extremist group.
The telcos may have jumped into the mobile wallet game too soon in an effort to control secure elements on their devices and give Near Field Communication technology a lift. The project eventually folded and Softcard technology was sold to Google, and the venture shut down in 2015.
"Everything old is new again," Riley said in acknowledging how the position of telcos in relation to payments services has changed over time.
Synchrony has also worked with Amazon on the Amazon.com Store Card; and worked with PayPal and its subsidiary on payment cards that complement digital services.
"This partnership is a great growth opportunity for Synchrony as we continue to diversify our portfolio," Margaret Keane, CEO of Synchrony, said in a Thursday press release. The release did not provide details on fees, incentives or design.The Apple Card, for example, is a metal card, the type most often associated with premium-level cards.
New York City-based Verizon is celebrating its 20th year of business, triggering some speculation that the card would be launched in June to mark that anniversary. The company generated revenues of $130.9 billion in 2018 through its voice, data and video services.
“Verizon’s loyal customers expect the best possible experiences and today’s announcement extends that commitment to the credit card market,” Ronan Dunne, executive vice president and group CEO for the Verizon Consumer, said in the release.