Cementing a connection that has helped to spawn a robust array of payment card options, Shell Oil Products US and Citigroup Inc. on Aug. 18 announced the renewal of their long-running credit card-issuing relationship as they prepare to roll out a new rewards program for their cobranded Shell MasterCard.
Shell recently stopped taking applications for the card, explaining on its website that it was developing plans with Citi to modify the rewards customers earn with purchases. Applications will be available September 1, when the new rewards program launches, a Shell spokesperson says. The new card, which carries no annual fee, will provide cardholders with a discount of up to 20 cents per gallon on their first 100 gallons of gasoline purchases each month.
Citi’s desire to renew its card-issuing relationship with Shell, which dates back to 1999, likely was a top priority because of Shell’s success in marketing a slate of successful private-label and cobranded cards, including prepaid and reloadable gift cards, fleet cards and a closed-loop automated clearinghouse debit card, one analyst suggests.
The two companies last year announced the new private-label Shell “Drive for Five” credit card, which provides cardholders who buy at least 45 gallons of gasoline per month a 5-cent discount per gallon (
Shell also offers a basic private-label card through Citi and the Shell Select Member private-label card, a spokesperson says.
Apart from Citi, Shell in 2009 launched its private-label Shell Saver card, offered in conjunction with First Data Corp. When used, the card settles purchases directly from consumers’ checking accounts via the ACH system. That card provides cardholders with a 2-cent discount on gas (
“Shell is huge, with a highly recognized brand, and Citi clearly wants to hold onto this relationship to use it as leverage for other deals it might do with other big retailers,” Brian Riley, senior director of research at TowerGroup, tells PaymentsSource.
In recent years, Shell has refined its ability to target a broad and diverse range of customers with its payment products, Riley says. “Shell now has a program for every functional card model, whether people want to pay it now or pay it later or prepay it, and they seem to be marketing them very efficiently,” he says.
Shell’s cards have broad recognition in the marketplace, but until recently the card discounts it offers on gasoline are relatively paltry compared with competing offers from certain other retailers that consumers can get using any credit or debit card, Riley notes.
Cardholders using the Environmental Protection Agency’s estimate of 536 gallons per driver per year would save only $10 a year using the Shell Saver card and about $26 annually on the “Drive for Five” card, he says.
Kroger Co. offers customers discounts of 10 cents per gallon at Shell Oil stations for every $100 spent at its supermarkets, which is double the discount customers receive using Shell’s Drive for Five card. And Walmart Stores Inc. offers customers 3 cents off per gallon on gasoline with gift card purchases, which is greater than the discount consumers get with a Shell Saver card.
“Shell gets people to buy into the program with aspirational dreams of saving a lot of money, but a lot of them probably don’t do the math,” Riley says.
Citi’s other retail credit card-issuing partners include Sears Holdings Corp., The Home Depot Inc. and Macy’s Inc.
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