JPMorgan Chase has agreed to purchase one of the biggest third-party credit card loyalty operators in a bet that pleasure travel will rebound sharply after the coronavirus pandemic subsides, CNBC has learned.
The bank agreed Monday to acquire the technology platforms, travel agency, gift card and points businesses of cxLoyalty Group, a privately held Stamford, Connecticut-based company, according to a person with direct knowledge of the deal.
JPMorgan is taking about half of the company’s 3,100 employees in the transaction and will create a new business within its retail division reporting to Marianne Lake, head of the bank’s consumer lending business, the person said. The transaction will close this week, but the person declined to say how much the bank paid.
“People across the globe want to vacation and travel again, and hopefully that will become a reality for many in the near future,” Lake said in a statement provided to CNBC. “Acquiring the travel and rewards businesses of cxLoyalty will provide enhanced experiences to our millions of Chase customers once they are ready, comfortable and confident to travel.”
JPMorgan had partnered with cxLoyalty for its popular credit card rewards program until 2018, when the bank switched to using Expedia. Now, the bank will eventually return to using cxLoyalty as the tech platform underpinning its travel program, with an emphasis on giving personalized recommendations based on users’ travel history.
A key rationale JPMorgan had for buying the operations was that by gaining cxLoyalty’s technology, it will own both ends of a two-sided platform. With millions of credit card users and direct relationships with hotel and airline companies, the bank can eventually command unique deals from those partners.
The rewards company serves many of the biggest U.S. card companies, including Citigroup, Capital One, U.S. Bancorp and Mastercard. Overall, cxLoyalty Group says it has 3,000 clients and marketing partners that serve 70 million consumers.
The deal will make Todd Siegel, CEO of cxLoyalty Group Holdings since 2013, head of the new JPMorgan business, according to a separate statement. JPMorgan isn’t buying the firm’s other main business, it’s global customer engagement division.