Delivery Startups Diversify With Credit Cards
Instacart and DoorDash to Launch Rewards Cards
Instacart and DoorDash (DASH), two delivery companies, are gearing up to launch branded credit cards which will reward frequent users. Both companies saw strong demand for their food and meal delivery services during the pandemic. HBut as more people receive COVID-19 vaccines and begin to feel comfortable returning to in-person dining and grocery shopping, delivery companies are looking for ways to diversify. Instacart and DoorDash see credit cards as a way to reward existing customers and entice new ones.
Instacart is teaming up with JPMorgan Chase (JPM) to launch its loyalty rewards card. DoorDash has not yet chosen a partner for its branded credit card though JPMorgan, nine other big banks, and a few fintech companies have approached the delivery giant about a potential deal.
Banks Want to Diversify Too
JPMorgan Chase and other banks see these branded credit cards as a way to diversify away from travel rewards cards. Revenue from travel rewards cards dropped significantly during the pandemic. Some analysts believe that travel will take years to return to pre-pandemic levels, so banks are searching for ways to make up for this lost business.
JPMorgan has long partnered with airline operators and hotel chains on co-branded cards. Recently it has also teamed up with Amazon (AMZN) and Starbucks (SBUX) to offer credit cards. The bank’s decision to back the Instacart credit card and bid for the DoorDash card signals it is expanding its co-branded partner base.
DoorDash is expected to name the issuer for its credit card in the coming weeks. The company is currently recruiting restaurants and stores to offer promotions and discounts through the card. DoorDash also wants to provide cardholders with access to events, including curated experiences at restaurants.
The Instacart credit card is expected to debut in 2022. It will likely offer perks like 5% cash back on all Instacart purchases.
Delivery services have become a part of many consumers’ daily lives during the pandemic. Now, these companies are looking for ways to keep up their momentum as some people’s habits begin to change.
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