Delivery services Instacart and DoorDash are both planning to launch their own credit cards, according to the Wall Street Journal.
Delivery companies made huge gains in 2020 with the pandemic. Many people tried online grocery shopping for the first time or utilized restaurant delivery. As a result, DoorDash went public in September and raised $3.4 billion. Instacart has signaled that it plans to go public in the near future, but recently added $265 million in round of funding.
The delivery companies are looking to new revenue models, as cities and states implement and caps on fees and the country opens up and relies less on delivery. Credit cards are thought to be one way for delivery companies to generate revenue and gain loyalty given the huge number of people that utilize the apps.
Instacart is expected to use JPMorgan Chase and Co. for a branded credit card, and DoorDash has had discussions with 10 different financial institutions, according to the story in the Wall Street Journal. The arrangements could allow banks to expand beyond airline and other travel industries, which have seen a huge increase in credit cards over the last decade.
“The credit cards are expected to help the companies hold onto those pandemic-driven gains, including incentivizing sign-ups for each platform’s membership program,” according to Tom Ryan of the Retail Wire. He added, “The credit cards can also be used to retain the many new members that tried delivery during the pandemic. Delivery will likely moderate as COVID-19 vaccinations support more visits to restaurants and grocery stores.”
The cards can also be a source of data collection for the companies. The delivery services could gain a better understanding of the types of products their customers purchase outside delivery and could use that information to create new products or services.
Instacart’s credit card is not expected to launch until 2022, but could use a cash-back incentive to lure current customers. DoorDash is expected to finalize its credit card plans “in the coming weeks.”