The world of credit cards certainly felt the impact of COVID-19. However, there is no shortage of innovation at Synchrony. In recent months, we’ve seen applications shift away from paper in a patent-pending process called Direct to Device, where merchants can send a credit application through email or QR code. Verizon’s co-brand was undoubtedly a win, but one of my personal favorites is the secured private label credit card with Amazon.
Another breakthrough was SyPI, the Synchrony Plug-In, which, with a 5-minute setup, allows shoppers to “apply for credit, check their balance, purchase activity, and credit.” SyPI also enables voice payments with Alexa and reduces credit application times with the “dApply” process. Many of the function’s interface with “Sydney,” Synchrony’s version of Siri, Alexa, or “Hey, Google.”
The latest innovation centers on Synchrony’s relationship with Venmo, a PayPal business. I am a big fan of PayPal and regularly use the account I set up more than 20 years ago to insulate my checking account from online merchants. If my household purchase is not through Amazon, it is likely to be found on PayPal.
With 200 million global customers, PayPal is no slouch when it comes to payments innovation, so today’s announcement is particularly impressive.
- Venmo today introduced its first-ever Venmo Credit Card, issued by Synchrony (NYSE: SYF) and powered by the Visa network, which gives customers automatic cash back on every eligible purchase, a personalized rewards experience, and the ability to manage the card directly in the Venmo app.
- The card unlocks new ways for Venmo’s community of more than 60 million customers to shop, share or split purchases, and earn cashback.
- The reward structure is good, and by using the highest spend categories, the cardholder does not need to redirect their spending based on quarterly rolling merchant categories. Customers earn cashback in eight different spending categories: Grocery, Bills & Utilities, Health & Beauty, Gas, Entertainment, Dining & Nightlife, Transportation, and Travel.
- Earning up to 3% cashback* on their top spend category, up to 2% back on the second-highest, and up to 1% back on all other purchases.
The contactless card is on par with industry standards, but a novel feature takes advantage of QR code technology:
“…each card is printed with a customer’s unique QR code on the front…The QR code can be scanned via a mobile phone camera to activate the card, or in the Venmo app by friends to send a payment or split purchases.”
This takes advantage of one of Venmo’s traditional sweet spots, splitting payments between friends.
Beyond the announcement, there are two important takeaways. The first is that Synchrony increased its bench strength with the general-purpose credit card. Between Verizon and PayPal, the partnerships penetrate a large share of U.S. households, especially when you consider Synchrony’s core base of 76 million active accounts. The next is a flair of continuous innovation at Synchrony. We are not observing a repackaging of old technology with a new name; these are real, usable innovations.
Overview by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group
