Almost any business of significant size now accepts standard credit cards-at least Visa and MasterCard, often Discover, American Express, and possibly others. In addition, there are some large businesses, such as Sears or other major department stores, that bypass the middle man and issue their own credit cards.
However, there is also a “middle ground” of sorts, called “branded” or “co-branded” credit cards. These are cards that, like standard credit cards, are issued by banks and processed by Visa or MasterCard or one of the other processing companies. However, these come with the name and logo of a specific merchant, much like directly merchant-issued cards.
If it is, say, a Visa card with the Acme Products brand, it can be used anywhere any Visa card could be used, so in that sense it’s just a regular credit card. But often Acme will offer special discounts or incentives to cardholders who use the card specifically at Acme. Plus there is the marketing element of having a card with the Acme name and logo seen every time the person opens their wallet to make a purchase.
Co-branded cards are a “middle ground” in price as well. A merchant will pay more than what they pay just to accept credit cards, while avoiding being vulnerable to customer defaults by issuing their own card.
In order to offer a branded credit card, the first thing a merchant needs to be aware of is it can take several months. So you can’t decide in November that you have a great idea for a Christmas promotion that requires a branded card, and seek to set one up then.
To create a branded card, a merchant needs to contact Visa or MasterCard or whichever credit card processor it is considering, and acquaint itself with the process at each and decide which it prefers. It must then find out which banks work with that credit processor and acquaint itself with the process that each bank it’s considering uses for issuing a credit card.
The merchant must then submit a Request for Proposal (RFP) form to banks it wishes to have its card backed by. (There are business consultants who specialize in helping with just this process.) The banks will respond, and then the merchant decides which option is most appealing. Contracts are signed with the chosen bank, and the merchant provides required documentation. A design is chosen for the card, featuring the merchant’s logo.
From there it’s just a matter of the merchant creating some kind of incentive program tied to the card, marketing the card, and convincing customers and potential customers of the value of obtaining and using the card.