JPMorgan Chase has agreed to buy one of the largest third-party credit card providers to bet that pleasure travel will rebound strongly after the coronavirus pandemic subsides, CNBC has learned.
The bank agreed on Monday to acquire the technology platforms, travel agent, gift card and points business from cxLoyalty Group, a privately held company based in Stamford, Connecticut, according to a person with direct knowledge of the business.
JPMorgan is adding approximately half of the company's 3,100 employees to the deal and will be building a new store within its retail division, reporting to Marianne Lake, director of consumer credit for the bank. The transaction will close this week, but the person declined to say how much the bank paid.
"People around the world want to vacation and travel again, and hopefully this will become a reality for many in the near future," Lake said in a statement. "By taking over the travel and rewards business from cxLoyalty, our millions of Chase customers can improve their experience once they are ready, comfortable and confident."
JPMorgan had partnered with cxLoyalty for its popular credit card rewards program until the bank switched to Expedia in 2018. Now, finally, the bank will again be using cxLoyalty as the technology platform for their travel program, with an emphasis on personalized recommendations based on users' travel history.
An important rationale for purchasing the operations was that by acquiring the technology from cxLoyalty, JPMorgan will own both ends of a two-way platform. With millions of credit card users and direct relationships with hotel and airline companies, the bank can ultimately receive unique offers from these partners.
The reward company serves many of the largest US card companies, including Citigroup, Capital One, US-Bancorp and Mastercard. According to its own statements, the cxLoyalty Group has a total of 3,000 customers and marketing partners who serve 70 million consumers.
The deal will make Todd Siegel, CEO of cxLoyalty Group Holdings since 2013, head of the new JPMorgan business, according to a separate statement. JPMorgan is not buying the company's other core business, but rather the global customer loyalty division.