Citi’s U.S. Consumer Cards business has agreed to acquire Kard Financial, a New York company that runs card-linked offer programs for banks and fintechs, the bank announced on August 13, 2026. Financial terms were not disclosed, and Citi said the deal is not material to its financial results. The acquisition gives the card issuer its own engine for merchant-funded rewards, in which retailers rather than the issuer pay for the perks.
Kard describes itself as a commerce media and rewards platform. It connects financial institutions and merchants through transaction data and merchant-funded rewards, and uses machine learning models to match and personalize offers. The deal remains subject to customary closing conditions, including required regulatory approvals. The two companies will keep operating independently until it closes.
Citi had 70 million cardmembers as of December 31, 2025, across general-purpose and private label credit cards and installment lending, the vast majority of them in the US. “We’re focused on helping customers get more value from their everyday spending,” said Abhinav Anand, Citi’s head of value cards, lending and commerce. Ben Mackinnon, Kard’s founder and CEO, said that serving “Citi’s 70 million cardmembers accelerates that original vision towards building the future of commerce.” Keefe, Bruyette & Woods advised Kard, Sullivan & Cromwell acted as counsel to Citi, and Latham & Watkins as counsel to Kard.
How a card-linked offer works
A card-linked offer is a discount tied to the payment card rather than to the shopping cart. The cardholder activates the offer in a banking app and pays as usual at the participating merchant. A few days later, a cash-back credit lands on the account, funded by that merchant.
That changes who pays for card rewards. In a conventional program, the issuer hands out points it pays for itself and books a reserve against them. In a merchant-funded one, a merchant pays for the discount offered to a cardholder it wants to win, and the issuer charges for access to its customer base. The table below compares the two models.
| Item | Conventional points program | Merchant-funded offer |
|---|---|---|
| Who pays | The issuer, out of interchange revenue and annual fees | The merchant, which buys targeted reach |
| Trigger | Any eligible purchase, under a published earn rate | A purchase at a specific retailer, after activation |
| Accounting | A points liability on the balance sheet until redemption | A customer acquisition cost for the merchant, with no reserve |
| Metrics | Points issued and points redeemed | Transactions attributed to the offer |
| Main risk | Program cost rises if more points are redeemed | Credit taken for sales that would have happened anyway |
In the US, points programs are funded mainly by interchange, the fee the merchant’s acquiring bank pays the issuer on every card payment, and by cardholders’ annual fees. That makes rewards a cost the issuer carries. A merchant-funded offer shifts the spend to the advertiser, which books it against its customer acquisition budget.
Attribution is the model’s weak spot
The business depends on separating sales the offer caused from sales that would have happened without it. Measuring that incremental lift takes control groups and tracking over time. The issuer sees only its own cardholders and misses purchases paid any other way. An advertiser whose cost per sale exceeds its margin stops buying, and the budget can disappear without warning. The revenue therefore rests on retailers’ spending decisions, whereas interchange follows a network fee schedule.
Low interchange makes the model more tempting in Europe
In the EU, using payment data for ad targeting is governed by the GDPR and by Article 94 of the second Payment Services Directive, Directive (EU) 2015/2366, which allows payment providers to access payment data only with the user’s explicit consent. Regulation (EU) 2015/751 caps interchange on consumer cards at 0.2% for debit and 0.3% for credit. The revenue that pays for points programs is structurally thinner there than in the US, which makes merchant-funded offers all the more attractive to a European issuer.
Four things the deal puts in play
- The economics of the issuer’s rewards programs, which move from a cost the bank bears to revenue paid by third parties.
- The commercial value of a bank’s transaction data, until now used mostly for risk management and fraud prevention.
- The position of independent card-linked offer platforms, several of which now serve rival issuers.
- How much proof of incrementality advertisers demand, which decides whether they renew their budgets.
The deal puts a card issuer into the advertising supply chain, alongside the retailers that already sell access to their shoppers. Whether it pays off will show up in two numbers: the net cost of Citi’s rewards programs and the share of that revenue coming from merchants. Citi does not currently report either one separately.