A California credit union has teamed up with an organization that promotes local shopping to offer a triple-rewards Visa card, PaymentsSource has learned. Los Angeles Federal Credit Union has formed a partnership with ShopLA City to launch a new Visa card that aims to boost sales at Los Angeles merchants by offering triple rewards points on any purchases made within the city.
“(Los Angeles) city officials approached us about creating then launching a Visa card rewards program that would help boost the city sales tax revenue and help Angelinos save money while shopping locally,” John Dea, president and CEO of Los Angeles Federal Credit Union (LAFCU), tells PaymentsSource in an email statement.
LAFCU is the designated credit union serving Los Angeles City employees, and “it made sense for us to work together on a project that will benefit LA City and Los Angeles residents,” he says.
ShopLA is an organization that promotes local shopping in Los Angeles. Supporters include Mayor Antonio Villaraigosa, various elected officials, public-service departments, local chambers of commerce, thousands of Los Angeles-based businesses, LA Inc. and the Los Angeles Convention and Visitors Bureau, according to its website.
The group aims to boost local taxable sales and raise awareness that sales tax revenues go toward improving the local quality of life, including maintaining municipal services and local employment. ShopLA notes on its website that for every $10 consumers spend within Los Angeles, $1 of the sales tax goes toward public services, including police, fire, libraries and others.
The ShopLA Visa card rewards cardholders with three points for every dollar spent at LA-area merchants and one point per dollar for all other purchases.
Cardholders may redeem their rewards points for merchandise, travel and gift cards through the credit union’s rewards program. The card carries a 0% APR for the first six months, then converts to a variable interest rate.
The credit union is not necessarily targeting the affluent market with the card.
“We are targeting all individuals who live, work and shop in Los Angeles and want to save money,” Dea says. “If they do not qualify, consumers can apply for our other low-rate LAFCU Visa Cards.”
The Credit Union and Shop LA City will market the ShopLA City Visa Card in local print, radio and online. “Internally, we will also feature ShopLA City Visa Card ads on our LAFCU website, in our LAFCU email blasts and inside our home banking interface,” Dea says.
One analyst says the card’s relatively rich rewards may help differentiate it from competitors’ offerings.
“It’s an interesting partnership,” Scott Strumello, an associate at Auriemma Consulting Group, tells PaymentsSource. “It does make sense for the credit union especially if the field of membership lives in that geographic area.”
Such programs might also work for a community bank. “I’m not sure we’ll see large issuers trying to match this program, but we certainly have seen a variety of these partnerships emerge as it’s getting harder for issuers to differentiate themselves on the traditional 1% reward rate.”
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