Gap to Replace Longtime Credit-Card Issuer Synchrony With Barclays -- 2nd Update
By AnnaMaria Andriotis
Gap Inc. is parting ways with its longtime credit-card issuer,
Synchrony Financial, and moving the business to Barclays PLC.
Barclays will take over Gap's private-label and co-branded
credit cards, including Athleta, Banana Republic and Old Navy, Gap
confirmed Tuesday morning after The Wall Street Journal reported on
the decision. The portfolio includes some 11 million open card
accounts, according to people familiar with the matter, with total
balances of roughly $3.8 billion at the end of March.
Synchrony has been issuing cards for Gap -- one of its five
largest retail card partners -- for about 22 years. The
relationship, one of the bank's longest-running card partnerships,
includes private-label cards that can be used only at company
stores and co-branded credit cards that cardholders can use at
nearly any merchant. Its Gap contract is scheduled to end in April
The retailer's co-branded credit cards will also change
networks, Gap said, moving from Visa Inc. to Mastercard Inc.
In a regulatory filing early Tuesday, Synchrony said it expects
to recognize a gain from the sale of the card portfolio and will
spend about $1 billion to repurchase shares and make
Gap marks the second major loss for Synchrony in recent years.
Walmart Inc. in 2018 decided to end its long-running partnership
with the bank, the largest U.S. issuer of store credit cards, and
switched to Capital One Financial Corp. The Gap portfolio accounts
for about 5% of Synchrony's $78 billion in total balances.
Synchrony and Gap shares were both down around 4% in Tuesday
Barclays has been looking to expand beyond the airline, hotel
and cruise line credit cards that dominate its U.S. portfolio. The
Gap account is appealing because it includes many creditworthy
cardholders. Some of the cards, in particular those issued to
Athleta and Banana Republic customers, tend to attract more
affluent borrowers, according to people familiar with the matter.
Slightly more than five million of the roughly 11 million total Gap
accounts are used at least once a month, one of the people
Gap is undergoing a revamp, closing hundreds of Gap and Banana
Republic stores. Gap in March projected that net sales would
increase in 2021.
Gap executives last year told Synchrony that the retailer was
going to issue a request for proposals from other card issuers to
get a better idea of its options, according to people familiar with
One of the items on Gap's wish list was for the card issuer to
take on more of the program's costs, people familiar with the
matter said. Under the deal with Synchrony, the people said, Gap
incurs about 80% of the card program's costs, including marketing
and fraud-related charges. Gap also receives about 80% of the
revenue produced by the cards, including from the interest charges
that cardholders pay on balances and the interchange fees that are
generated when cardholders use their Gap cards at other merchants,
Gap also wanted guaranteed revenue from the deal, one of the
Separately, Gap wants its relaunched card program to closely tie
into a rewards program that it launched across its retail brands
Write to AnnaMaria Andriotis at firstname.lastname@example.org
(END) Dow Jones Newswires
April 13, 2021 10:20 ET (14:20 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.