Finance News

Citigroup wins contract to supply Wayfair bank cards, displacing rival Alliance Knowledge Techniques

Niraj Shah, CEO of Wayfair

Ashlee Espinal | CNBC

Citigroup has been given the right to offer a pair of new credit cards with online furniture seller Wayfair, which, according to CNBC, is displacing Alliance Data Systems.

The deal came amid the rising demand for household goods as millions of Americans were forced to work from their homes during the coronavirus pandemic. Wayfair saw sales jump 84% in the second quarter and made a profit for the first time since going public in 2014. The online retailer's stocks are up 192% this year.

Credit card companies have fought fierce battles over multi-year co-brand deals as they allow banks to quickly tap consumer spending at popular retailers. For example, Goldman Sachs received the rights to offer the Apple Card last year and thus immediately expanded the emerging consumer finance business.

Citigroup, which took the Costco card from American Express in 2016, ousted Alliance Data of Columbus, Ohio, a major private label company that had previously offered a Wayfair card, according to a person with knowledge of the deal.

E-commerce companies in particular saw robust sales as the pandemic made it difficult to shop in physical stores. Citigroup spokeswoman Jennifer Bombardier said Citigroup retail card users' online spending increased nearly 30% this year compared to 2019.

"As retail continues to be online, we are excited to partner with Wayfair to provide customers with seamless and convenient financing," said Craig Vallorano, head of Citigroup's retail services business.

Citigroup products include a business card that works only with Wayfair and its affiliated brands, and a co-branded card that works wherever Mastercard is accepted, according to Bombardier. Both offer 5% rewards on eligible Wayfair purchases and an annual variable rate of 26.99%.

The co-branded card also earns 3% on grocery stores, 2% on online purchases and 1% on all other transactions. Customers can use the cards for interest-free financing if they have been paid in full for up to 24 months on qualifying purchases, or for larger purchase plans that have an annual interest rate of 9.99% for up to 60 months.

How Wayfair becomes the Amazon of the homeware market

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