STAMFORD — Consumer financial-services firm Synchrony and Amazon announced Monday they were launching a private-label credit card for customers who want to improve their credit and take advantage of a number of benefits on Amazon’s website.
Amazon Credit Builder allows those on fixed budgets to make purchases on Amazon.com up to their credit limits. The card has no annual fees, offers eligible Amazon Prime program members 5 percent back on purchases with Amazon and also provides a number of financing options.
Synchrony and Amazon’s new program is similar to the e-commerce giant’s existing Amazon.com Store Card, but with more stringent application requirements.
A minimum security deposit of $100 is required. The deposit amount then becomes the credit limit, with a maximum of $1,000.
Customers could be eligible for an upgrade to the Amazon Store Card as soon as seven months after an account is opened. ACB card deposits would then be refunded after switching to the Amazon Store Card.
Synchrony’s partnership with Amazon would help to offset the loss of business from Walmart, the country’s largest brick-and-mortar retailer, which last year decided to end the Stamford company’s two-decade run as its credit-card provider in favor of a new deal with Capital One.
Walmart then sued Synchrony last November for alleged breach of contract, but it dropped the complaint a couple of months later.
In the first quarter of this year, Synchrony’s revenues reached about $4.2 billion, a 10 percent increase from the same period in 2018. Profits jumped to $1.1 billion, from $640 million a year ago — an increase that reflected a $522 million release from the company’s reserve related to the pending sale of the Walmart credit portfolio.
Synchrony’s growth was largely driven by its acquisition in July 2018 of PayPal’s $7.6 billion consumer-credit portfolio.
Synchrony is now the exclusive U.S. issuer of PayPal Credit’s online consumer-financing program through 2028, supporting its goal of becoming a major digital-payments player.
Net charge-offs — which refer to debts the company does not expect to recoup — comprised 6.06 percent of loan receivables in the past quarter, compared with 6.14 percent in the same period of 2018.
Synchrony shares closed Monday at about $33, down 1.4 percent from their Friday finish.
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