Gap and Synchrony Part Ways On Branded Credit Cards After 22 Years

Gap Inc. and Synchrony Financial will part ways on their branded credit card partnership, after the two companies were unable to reach suitable terms to extend a business relationship that dates back more than two decades.

In total, the financing pact includes 11 million card holders with roughly $3.8 billion in balances through Gap’s four major brands that also include Old Navy, Banana Republic and Athleta, which the lender said will remain active through the contract end date a year from now.

“Synchrony will not renew its financing partnership with Gap Inc. when it expires on April 30, 2022,” an 8-K filing with the SEC said. “Synchrony was unable to reach contractual and economic terms with Gap that made sense for our company and our shareholders.

The portfolio represents approximately 5 percent of Synchrony’s loan receivables.

Changes At The Gap

Gap has yet to officially acknowledge the change, but The Wall Street Journal cites unnamed sources familiar with the transaction as saying the retailer is moving the business to Barclays.

In addition, the Journal said the Gap account is one of Synchrony’s top-five largest and longest running store-branded card relationships, noting that the departure marks “the second major loss for Synchrony in recent years” after Walmart moved its long-running partnership with Synchrony to Capital One Financial in 2018.

Although there has been no mention of it, the Walmart store card account itself could also face future challenges as the retailer is currently actively moving toward staffing and launching its own in-house financial and banking firm known as Hazel.

The credit card move by Gap comes amid a raft of other organizational changes, store closures and digital upgrades aimed at growing the 50-year-old San Francisco retailer’s sales and customer base.

In the past year alone, shares of Gap have tripled in value and raised the retailer’s market value to more than $11 billion.

Although fashion is arguably a more important profit driver for Gap than finance, its store card program is certainly an important part of its overall pitch to acquire, retain and reward customers. For example, its current “Reap the Rewards” program allows customers who use a Gap credit card to earn points on any in-store and online purchases and then redeem those rewards at any Gap Inc. brand.

In addition, Gap also currently offers a premium Silver Card to customers which includes the same 1-point-per-dollar-spent reward feature as well as other consumer-retaining perks such as free three- to five-day shipping on online orders, 20 percent bonus points each quarter and free basic alterations on Banana Republic purchases.