By  Fri Mar 2, 2012

Next from Daily Deals Sites: Co-branded Credit Cards

Elvert Barnes / Flickr source

Apparently, swarming your email inbox is not enough face time for daily deals sites and their merchant clients. LivingSocial, the second largest daily deals site, plans to introduce a co-branded credit card so that those daily deals get more attention.

“We will use this as a platform to encourage people to come back to merchants,” John Bax, chief financial office of LivingSocial, told Reuters.

Carrying no annual fee, the card will earn 10 credits, called “Deal Bucks”, when members make 10 purchases per month with the card. The credit can be applied to daily deals and other offers from LivingSocial.

The card will be issued by Chase (NYSE: JPM), the fourth largest co-branded U.S. credit card issuer by volume, according to a 2011 Nilson report.

With the credit card, LivingSocial is offering merchants a way to establish a relationship with customers, especially with consumers who don’t come back for more purchases.

“Small and medium-sized local businesses will never be able to have their own credit card or loyalty program. We will be able to bring them the benefits of that,” added Bax.

A new trend in daily deals

The potential for LivingSocial’s credit card is worth noting.

In a 2011 survey by LightSpeed Research, 27% of LivingSocial members said they were interested in a LivingSocial-branded credit card. Also, 34% of Groupon customers were interest in a Groupon-branded credit card.

Groupon is the biggest daily deals company in the U.S.

The card also caters to a crowd that makes for the perfect credit-card user: spending power with responsible debt management.

The survey found that, compared to the overall U.S. credit cardholder population, daily deals customers had higher credit scores, were 50% more likely to have household incomes above $75,000, made three times as many credit purchases, and were twice as likely to pay off their monthly card balances.

If LivingSocial finds success with its card, then Groupon and others are likely to try a similar approach.

No launch date was disclosed, but the LivingSocial credit card is expected in the coming months.

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