RBC and Shoppers Drug Mart latest to break up credit card marriage

In the sometimes tumultuous world of co-branded loyalty cards, another partnership has gone sour. In this latest case, Canada's largest drugstore chain and biggest bank are parting ways.

Royal Bank and Shoppers Drug Mart are ending both their co-branded debit card and Shoppers Optimum MasterCard.

The cards allow Shoppers customers to earn extra Optimum points they can then exchange for free in-store products.

Neither card is available any longer. Their combined 200,000 existing customers will be switched over to other RBC banking products by the fall.

Both Shoppers and RBC say the breakup is mutual. Shoppers Drug Mart chalks it up to "business reasons."

Co-branded cards 'very much like marriages'

In Canada, we're obsessed with credit cards that earn us rewards with every purchase. To satiate our hunger, retailers and banks are rushing to hook up and offer freebies in exchange for our loyalty.

"Everybody wants to rack up as many points and as many free blenders and trips as they possibly can," says Queen's University marketing professor Kenneth Wong.

But the co-branded partnership doesn't always pan out, leaving customers who were reaping rewards to suddenly grapple with the change.

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"They're very much like marriages," says Simon Fraser University marketing professor Lindsay Meredith. "Very often, one person seems to think they're getting less out of it than the other and that contributes to these kind of shake-ups."

In the U.S., Costco recently switched credit card providers. Starting this week, American Express rewards card will no longer work at the popular bulk store, which is now working with Citi Visa. Canadian Costco stores ended their relationship with American Express in 2014, and then teamed up with Capital One to offer a co-branded MasterCard that includes cash-back rewards.

Bank of Montreal offers a co-branded BMO-Sobeys Air Miles MasterCard. But in 2014, the bank quietly ended its BMO Sobeys debit card.

Probably the biggest Canadian co-branding shake-up occurred in 2013. That's when Aimia, which operates the Aeroplan program, chose TD as the primary issuer of Aeroplan Visa credit cards. Previously, it was tied only to CIBC.

After two months of negotiations,TD took on new Aeroplan Visa card customers and acquired half of the CIBC customers who didn't have a broader relationship with the bank.

TD promised a "seamless" transition for CIBC cardholders, but many complained that it was anything but smooth.

"Sold like railgrade cattle by .@cibc and .@Aeroplan. Lost cards in the mail, lousy website, missing statements," one customer tweeted shortly after the official switch in 2014.

"Transition from CIBC Visa to TD visa is disgusting. I'd rather keep my money in the couch," complained another.

What broke up Shoppers and RBC?

Wong speculates the RBC-Shoppers marriage was doomed in 2013, when Loblaw grocery giant announced it was buying the drug store chain for $12.4 billion.

"I think that it was inevitable once [RBC's] contract expired," says Wong, pointing out that Loblaw offers President's Choice Financial banking services in partnership with CIBC.

When the Shoppers-Loblaw merger was announced, some Shoppers customers feared that the Optimum program would be affected. But both businesses maintained the rewards program would keep its independence.

Wong believes Shoppers will unveil a new type of Optimum rewards credit card that may still remain independent but be managed centrally by its new owner. "It would be a Shoppers credit card with all its back-office support combined with President's Choice Financial services. That would be the logical model to me," he says.

Merry Walmart-MasterCard marriage

Of course, not all credit card marriages fall apart: many do flourish. "These alliances can bring great rewards," says Meredith.

They can also aid a retailer in a financial dispute. Walmart has a tight relationship with MasterCard, offering a rewards credit card with Walmart Canada Bank. Meredith says that strong partnership enabled the retail giant to drop Visa last week, after a dispute over merchant transaction fees.

"Don't think for a second that Walmart would have kissed off Visa if it didn't have a bit of a safety net going for itself."

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The next time you sign up for a rewards credit card, don't forget that sometimes alliances shift. You may gleefully amass travel or other bonus points at the outset, but in the future your card may be declined or suddenly become associated with another bank.

However, our relationship with rewards cards is so strong, a few bad business break-ups are unlikely to cause shoppers to protest too loudly. We're too busy looking for our next opportunity to pile up points.