Amazon renews Prime credit card pact with JPMorgan after flirting

Amazon has chosen to renew a deal allowing JPMorgan Chase to issue the tech giant’s flagship rewards credit card, ending months of heated negotiations, CNBC has learned.

The Amazon Prime Rewards card was one of the industry’s most highly coveted co-brand deals, a rare prize because of the massive scope of Amazon’s loyalty program, with its estimated 150 million U.S. members, according to people with knowledge of the talks.

While JPMorgan has issued Amazon’s card since it was little more than an online bookseller two decades ago, that didn’t stop Amazon from soliciting bids to replace the bank in mid-2021. American Express, Synchrony and Citigroup were among the issuers involved in discussions, and Mastercard had hoped to displace Visa as payments network, said the people, who declined to be identified speaking about the private process.

“This was a once-in-a lifetime opportunity to penetrate Amazon and have a step change in your card business,” said one of the people.  “If Chase were to lose it, it would be the shot heard around the payments world. Any winner would gain instant credibility and a new growth story for Wall Street.”

Credit card deals with popular brands including Amazon, Costco and American Airlines have become some of the most hotly contested contracts in the financial world. That’s because they instantly give the issuing bank a captive audience of millions of loyal customers who spend billions of dollars a year. The biggest pacts can make up a disproportionate share of an issuer’s business; American Express lost 10% of its cards in circulation when Citigroup won the bid for Costco’s card in 2015.

The card deals are so important to banks that CEOs including JPMorgan’s Jamie Dimon and Citigroup’s Jane Fraser are known to get involved hashing out the transactions, the people said.

Discussions for the Amazon card included JPMorgan’s stance that it could walk away from the two-decade long partnership and sell its loan portfolio, Bloomberg reported in June. Loans made by Amazon Prime customers held at the bank’s Chase division total roughly $20 billion, said the sources. Doing so would ignite an arduous process of switching over millions of customers to a new bank while making sure their cards still worked perfectly.

That may have been a negotiating tactic on the part of JPMorgan, because while Amazon experienced torrid growth during the pandemic as people were forced to stay home, other segments that Chase cards are known for — hotels, restaurants and entertainment — declined sharply. That made Amazon even more important for the biggest U.S. bank by assets.

Despite their importance for banks and to American consumers, who have become obsessed with maximizing card rewards, the contracts themselves are shrouded in secrecy. Amazon required participants to sign non-disclosure agreements and ran its own RFP, or request for proposal, for the deal, largely excluding third-party…