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Wal-Mart offers its cardholders a bigger rebate online than in stores

April 1, 2016 04:16 PM
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Wal-Mart Stores Inc. is for the first time is giving its credit card holders a bonus for shopping online —and it’s a bigger bonus than they will get when shopping in a Wal-Mart store.

Wal-Mart, No. 3 in the Internet Retailer 2015 Top 500 Guide, today began offering shoppers using its Wal-Mart credit card and its prepaid Wal-Mart Money Card 3% cash back on all purchases on Walmart.com. In-store shoppers can also earn cash-back, but they only get a rebate of 1% of their purchases.  Cardholders get a 2% rebate on fuel purchased at Wal-Mart gas stations.

The retail giant previously offered cash-back rewards for using its credit card in store and to buy gasoline, but not for buying online. The previous offers were $5 back for every $500 spent at Wal-Mart stores and a discount of 5 cents per gallon on fuel purchased at Walmart gas stations. The card issuers, Synchrony Financial for the Visa Inc. and MasterCard Inc. credit cards, and Green Dot for the Wal-Mart money card, manage the rewards program.

A Wal-Mart spokeswoman says the retail giant has a total of 10 million credit and prepaid card holders combined, but she declined to provide a breakdown between the two types of cards.

Asked why the cash-back rate is higher online than in-store, the spokeswoman says, “I don’t have an exact answer. We want to ensure we brought our value proposition into the 21st century. We know how important online is to our customers.”

Shoppers will receive a statement credit each month on their credit cards and payment at the end of the year on the prepaid card after the holder has had the account for 12 months, the Walmart spokeswoman says.

Payments consultant Steve Mott says Wal-Mart may be seeking to capture more information about its online shoppers, who he says tend to have higher incomes than its store shoppers. A store-branded card allows the retailer to track the purchases of each cardholder. This is a more targeted approach than Wal-Mart has taken in the past, Mott says.

“Walmart's recent restructuring—increasing wages, closing unprofitable stores and coming out with their own mobile wallet—demonstrate for all to see that the world's biggest retailer is doing business in a very different fashion these days, now that it has the opportunity to impact and drive higher profits in ways that generally weren't available to it until recently,” says Mott, principal at BetterBuyDesign. 

The Wal-Mart announcement follows Costco Wholesale Corp.’s release March 24 of details about its planned June 20 launch of a new card, the Costco Anywhere Visacard to be issued by Citigroup Inc. The new Costco card, a switch to Visa from American Express, will offer 2% back on Costco and Costco.com purchases, 4% cash back on eligible gas purchases (on up to $7,000 per year, then 1% back), 3% back on restaurant and travel purchases, and 1% back everywhere else, the company says. Shoppers pay no annual fee above the $55 yearly Costco membership fee. Costco is No. 11 in the 2015 Top 500.

Three other department store chain rivals offer rewards programs that are the same online and in stores. They include:

  • Sears Holdings Corp. (No. 5): Shop Your Way members earn 5% off in points on the first $1,000 in spend and 1% on amounts over $1,000 of a qualifying automotive or tire purchases. In July, Discover doubled the cashback rate for both Sears and Kmart to 10% through its Discover Deals portal.
  • Target Corp. (No. 16): Shoppers at Target stores and Target.com receive a 5% rebate on all purchases made using their REDcard. If they use a Target REDcard in the same purchase transaction with another form of payment, the 5% discount applies only to the purchase amount applied to the REDcard.
  • J.C.Penney Co. Inc. (No. 37): Shoppers earn one point for every dollar they spend on certain items. When they accumulate 100 points, they are earn a $10 J.C. Penney rewards certificate.

Asked about the timing of the announcement, the Wal-Mart spokeswoman said, “There was no particular reason for today. It’s not an April Fool’s joke, that’s for sure.”

 

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