The first-ever consumer credit card from Verizon, unveiled Monday, is the latest example of a card issuer tailoring its rewards program to reflect pandemic-induced changes in Americans’ spending habits.
The metallic card, issued by Synchrony Financial, will offer 4% back on grocery purchases and 3% back on restaurant spending, including takeout and curbside pickup orders. As consumers’ travel spending has plunged over the past few months, rewards offered throughout the credit card industry have shifted away from airline miles and hotel stays and toward everyday spending categories.
To cite a few examples: JPMorgan Chase, on its high-end Sapphire Reserve card, is temporarily offering five times points on grocery purchases.
Until Sept. 30, Capital One Financial is allowing customers who have accumulated rewards miles to redeem them for streaming service purchases and restaurant takeout orders. American Express, which typically leans heavily on travel-related rewards, has started offering a sweeter deal to certain cardholders who redeem their rewards at Amazon.com.
“Banks are adjusting to the new realities consumers face,” Matt Schulz, a credit card industry analyst at LendingTree, said in an email.
“I think these changes tell us that card issuers don’t expect things to get better very soon. Many of these changes probably aren’t permanent, especially the ones made to high-end travel cards, but they’re significant enough that they’re not going to be gone in a month either.”
Planning for the Verizon credit card, which launches Friday, began before the coronavirus triggered economic shutdowns across the country. A customer survey in May yielded positive responses, which convinced executives that it made sense to move forward during the pandemic, according to Frank Boulben, a senior vice president at Verizon, who spoke Monday during a live-streamed product announcement.
Stamford, Conn.-based Synchrony said in April that its customers were spending significantly more money at grocery stores, while purchases on dining, gas and travel were down. Other card issuers have noted similar trends, though fuel and restaurant spending have begun to rebound more recently.
In April, Synchrony President Brian Doubles predicted that consumers would start to use the company’s products differently as a result of the pandemic.
“We know that they’re going to shop differently, they’re going to spend differently, they’re going to pay differently,” Doubles said during the firm’s first-quarter earnings call.
He added, “We know our partners are going to come out of this looking differently, and they’ll have different strategies that we need to flex to.”
Verizon views the new credit card both as a way to keep its customers in the fold — the product will only be available to the company’s existing wireless customers — and to encourage them to spend more money on the firm’s own products.
Verizon cardholders may qualify for discounts on their cellphone plans, while those who make Verizon purchases will receive 2% rewards. Customers will be able to use the rewards they accumulate to reduce their monthly phone bills or toward the cost of a new phone.
The Verizon card will also allow for contactless payments, which may appeal to consumers who are worried about the risk of coronavirus infection during in-store transactions. Contactless payments are widely expected to get a boost from the pandemic.
“This card represents what consumers are demanding right now — a contactless, frictionless and digital-first experience,” Tom Quindlen, the CEO of retail cards at Synchrony, said in a joint press release with Verizon.
