Affinity card - a type of a payment card issued by a financial institution in conjunction with a non-financial group, such as an educational institution, sports franchises or non-profit organization, in order to support activities of such a group. The non-financial group allows the financial institution, e.g. bank, to issue a credit card which is identified with that group (by name/logo) and in exchange receives a part of commission from issuing the card and from each transaction the card holder makes (House of Representatives 1989, p. 251-252).
Basic affinity card mechanism
Firstly introduced in the UK in 1987 by the Bank of Scotland, the affinity card uses a mechanism of so-called “emotional spending” which normally represents shoppers compulsive habits of doing shopping and transcends it into a positive act of selfless consumerism which supports activities of a charitable organization or a non-profit institutions which the card holder can usually choose on his own (E. Galanter and other, 2011, p. 205).
In exchange for the share in earnings from the usage of the affinity card, the financial institution gains access to the charity's database of members and supporters and obtain a partner who may endorse a product by allowing its name and logo to be used on promotional materials (S. Adkins 2011, p. 121-122).
Because affinity cards work on the same principle as reward cards, they are often confused with co-branded cards. Nevertheless, the difference between the affinity and co-branded cards is that the percentage generated from each transaction made with an affinity card is not given back to the card holder but contributes to the non-profit institution of card holder's choice.
Although affinity cards are likely to be presented as a collective benefit for the financial institution, charitable organization, and card holder, there may be certain negatives as well. Affinity cards usually charge higher fees than other cards as well as offer fewer perks. The percentage donated to the specific charity is also relatively small and could vary between 0.25-1 percent, nevertheless, the popularity of affinity cards is still growing and gaining more and more users (E. Galanter and other, 2011, p. 205).
- Adkins S. (2011), Cause Related Marketing: Who Cares Wins, Butterworth-Heinemann, London/New York
- Brooks R. (2010), The Power of Loyalty: 10 Essential Steps to Build a Successful Customer Loyalty Strategy (StartUp Series)", Entrepreneur Press
- Galanter E., Moskowitz H., Silcher M. (2011), People, Preferences & Prices: Sequencing the Economic Genome of the Consumer Mind, Bentham Science Publishers, Saif Zone, Sharjah, United Arab Emirates
- House of Representatives (1989), Hearing before the Subcommittee on Oversight of the Committee on Ways and Means, Second Session, May 9, 1988, Serial 100-74: Discussion Options on Unrelated Business Income Tax, Government Printing Office, Washington, DC
- Winn F.E. (2012), How to Make Your Credit Card Rights Work for You: Save Money, Xlibris Corp
- Worthington, S. and Horne, S. (1992), Affinity Credit Cards: Card Issuer Strategies and Affinity Group Aspirations, International Journal of Bank Marketing, Vol. 10 No. 7, pp. 3-10.
Author: Maksymilian Piaskowski