An affinity card is a credit card that features a logo and imagery associated with a specific organization, a group or a club that certain people connect with, support or like for some reason. Sometimes an affinity card can be set up as a debit card instead of a credit card.
The card is offered to people who would enjoy showing off their membership in or support of an organization, a group or a club with this style of pre-designed custom card.
Affinity Vs. Co-Branded
Both affinity and co-branded cards result from arrangements between two parties – a bank and/or credit card network company and the entity represented on the front of the card. Typically, an affinity card involves a non-profit or not-for-profit entity; whereas, a co-branded card involves a for-profit entity. Of course, some exceptions exist. Universities and sports franchises are examples of entities that can be set up in arrangements for either type of card. The primary difference between the two types of cards is the arrangement between all parties.
An affinity card is designed for a profit-sharing arrangement in which the issuing bank agrees to provide the organization, group or club with part of the transactions fees or a bonus in certain scenarios, such as when cardholders use their cards to make purchases or new people set up cardholder accounts. Some banks pay the affinity card entity an extra bonus for actively promoting the card to bring in new cardholders. Although it is unlikely that this type of arrangement would generate enough money to save a failing charity, for example, it does create a small, regular passive revenue stream.
A co-branded card is typically based on an arrangement in which the cardholder gets some sort of reward for using the card, such as a cashback or points reward. All parties in a co-branded arrangement also benefit from new customers and more widespread brand recognition whenever cardholders use the cards. Co-branded cards, like affinity cards, promote an increase in credit card transactions and customer loyalty.
Merchant Account Impact
An affinity card has no adverse financial impact on a merchant account. As long as a merchant accepts the credit card, and his bank representative has set up his merchant account with the correct service entitlement number for the card type, he can take the card and process the transaction like he would any other similar type of card.