Have you noticed how often you are offered a store credit card when you are out shopping or shopping online? Have you noticed how hard the pitch is, with attractive discounts and loyalty reward programs on offer? There are sound reasons businesses are trying their utmost to sign you up for their credit card.
White-label credit cards, also called private label credit cards, are a way to incentivize customers to frequent your business more often. This article will explain how a white-label credit card works, what the benefits are (you will be surprised!), and will help you decide if your company needs to look into offering white-label financing.
What is a White-Label Credit Card?
The term “white-label” is used to refer to a product or service that is made or backed by someone else but has your brand or logo on it. The customer has every reason to believe you are backing the financing in-house. Taking advantage of white-label services and products offered by financial institutions extends the reach of your small business far beyond what you have the staff and resources to provide.
Usually, white-label credit cards are processed by a financing company and branded with the name of your company and logo. When you partner with a financing company to offer a white-label credit card, you are taking advantage of recently developed technology that offers your customers a credit card processing and payment portal that is customized to reflect your brand.
Lest you think that white-label financing is only for large companies, think again. All of the major lending institutions are offering their version of white-label financing. It is only a matter of researching the available options online and finding one that is right for you, your business, and your customers.
What are the Benefits of Offering a White-Label Credit Card?
White-Label Credit Cards Build Awareness of Your Brand and Increases Credibility
Imagine you are a plumber and there are two local plumbing supply stores where you can purchase the supplies you need to do business. Distance and price being comparable, how would you choose between them?
What if one of these stores offered a credit card or line of credit to customers, along with a loyalty reward program and occasional other discounts and incentives? Would you be motivated financially to patronize that plumbing store instead of the other?
What if the plumbing store’s credit card was branded with its logo and name? Would that make that store seem more like a prosperous, established company that you can rely on?
Think about how your current and prospective customers would view your business if you offered financing under your own brand.
A White-Label Credit Card Portal Increases Your Customer Loyalty
One rule of thumb of doing business is that it is much less difficult to keep a repeat customer than attract a new one.
Let’s say you own and operate a high-end antique furniture store, and an interior designer loves your shop but does not have the funds upfront to pay for what he needs for his customers. Rather than use just any credit card, wouldn’t he have an incentive to purchase at your store with your credit card and take advantage of customer loyalty rewards or exclusive sales for credit card holders?
White-label financing, along with many perks you attach to that financing, encourages repeat purchases, and builds customer loyalty.
A White-Label Credit Card Portal Gives You More Information About Your Customers
If you offer a financing processing portal that your clients or customers can securely join, that portal will ask for and get contact and credit card information about your customers, allowing them to make purchases with one click or with face ID on their smartphone.
Customer convenience is not the only benefit of a white-label credit card portal. You will also be able to store information about the purchases your customers make from you, and with some marketing platforms, you are able to target customers with preference-specific advertising. If the customer agrees, you might even be able to share or sell their information to business partners.
Financing Through a White-Label Credit Card Boosts Sales
If you sell something that is fairly expensive, say, cars, jewelry, furniture, appliances, and the like, if you offer white-label financing that puts your product in reach of most customers.
Automobile manufacturers actually started the white-label financing trend, offering to finance sales through a lending institution, and taking advantage of technology to assess the creditworthiness of a purchaser and offer them financing terms on the spot.
Using White-Label Financing Might Give You a Security Interest in the Collateral Your Customers Purchase from You
Debt on a credit card from a lending institution is usually considered general unsecured debt that can be discharged in bankruptcy. However, jewelry stores, furniture stores, appliance stores, and big-box stores offering appliances have taken advantage of the ability to enter into private white-label credit card contracts with their customers.
Those contracts grant the lender a security interest in purchases and give the lender the ability to repossess them or negotiate with a bankruptcy debtor over a payoff of the collateral.
What are the Detriments of a White-Label Credit Card?
Not Every Financing Company Offering white-label Credit Cards Offers Mobile Processing
When you shop around for white label financing, find out if the programs offered are compatible with mobile payments through Google Pay, Apple Pay, and Samsung Pay. You want to do business with a financing company that utilizes the latest technology to facilitate mobile payment because mobile and paperless payment is the wave of the future.
Every Financing Company Offers Its Own white-label Financing Agreements, and They Vary in Cost to You
Research carefully. A small business owner could give away the farm if signing a financing agreement they do not fully understand.
How Do I Know Whether a White-Label Credit Card is Right for My Business?
Ask yourself the following questions about whether white-label financing is appropriate for you and your business, in general:
- Is white-label financing something that would encourage purchases from my business?
- Would my current customers be interested in this kind of financing?
- Would the availability of financing attract new customers?
- Does a loyalty rewards program for repeat customers lend itself to my type of business? What about discounts for card users?
- Do I have competition that I need to differentiate from somehow?
- Does my business sell high end, luxury, or expensive products that I want a security interest in?
- Does my business have the time and resources to implement white-label financing?
Ask yourself these question about the financing companies you are considering partnering with:
- What would I have to change to work with this company?
- How much will this white-label financing solution cost upfront?
- How much will this white-label financing cost monthly, quarterly, and yearly?
- What resources will I have to dedicate to maintaining this solution?
- Is the virtual interface or software easy to use, and do they provide training?
- Does this company offer installation support, if so, how much does it cost?
- Does this company offer ongoing support, and if so, how much does it cost?
- Can this company provide references from previous partners, or can I talk with anyone who has partnered with this provider?
Take your time and research all of your options rather than rushing into white-label financing because it sounds like a great way to grow your business. It is, but you want to partner with the financial institution that offers the right white-label financing program for you.
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