Capital One Financial has added REI Co-op, the outdoor equipment retailer, to its expanding clutch of co-branded retail credit card partners that includes
Capital One will maintain some core features of the existing REI card, a Mastercard which was previously issued by U.S. Bank, including 5% back on purchases at REI's 177 stores. It's bumping up rewards on all other purchases to 1.5% from 1%, the company said in a press release.
But Capital One will no longer give REI credit card users 2% back for paying with a mobile wallet, a feature U.S. Bank — a unit of U.S. Bancorp — introduced in 2019. Capital One executives did not offer a reason for dropping the perk.
Analysts said mobile wallet use may have gained sufficient momentum to thrive without incentives.
"An incentive is generally only dropped if it either costs too much for the value, or the value isn't sufficient to drive demand. It might be that with the increase in wallet usage created by the pandemic, there's no reason to provide an incentive for incremental usage," said Thad Peterson, a strategic advisor at Aite-Novarica.
Analysts were expecting Capital One’s marketing spending to slow significantly after it surged to nearly $1 billion at the end of the year.
U.S. Bank and certain other issuers are continuing to give consumers extra rewards for paying with mobile wallets. The U.S. Altitude Reserve Visa card rewards users with 3X points for every $1 spent using a mobile wallet, and users of the Kroger Mastercard issued by U.S. Bank can earn up to 5% back for mobile wallet purchases.
JPMorgan Chase has offered up to 5% cash back to Chase Freedom credit card users who paid with mobile wallets, and the Goldman Sachs-issued Apple credit card gives users 2% cash back in Apple Daily Cash with every purchase using Apple Pay via an iPhone or Apple Watch.
To further refresh the REI card, Capital One is making all-new REI cards out of 85% recycled materials, underscoring REI's commitment to sustainability. REI card users also may receive 5% back in rewards for donations made to the REI Cooperative Action Fund, a nonprofit supporting justice, equity and belonging in the outdoors. Capital One will also provide an annual donation to that fund, according to the release, which was issued Monday.
Other features of the REI card that continue under Capital One include no annual fee and the ability for new customers to earn a $100 REI gift card by making a purchase with the card at any non-REI store within 60 days of opening an account.
