The deal happened amid surging demand for home goods as millions of Americans were forced to work remotely from their residences during the coronavirus pandemic. Wayfair saw an 84% jump in second-quarter sales and turned a profit for the first time since going public in 2014. The online retailer's stock has climbed 192% this year.
Credit-card issuers have been fiercely jockeying over multi-year co-brand deals as they offer banks a way to quickly tap into consumer spending at popular retailers. For instance, last year Goldman Sachs won the rights to offer the Apple Card, helping it immediately ramp up its nascent consumer finance business.
Citigroup, which wrested the Costco card from American Express in 2016, similarly displaced Columbus, Ohio-based Alliance Data, a major provider of private-label cards that had previously offered a Wayfair card, according to a person with knowledge of the deal.
E-commerce businesses in particular have seen robust sales as the pandemic makes it harder to shop in physical stores. Online spending by users of Citigroup retail cards jumped almost 30% this year versus 2019, said Citigroup spokeswoman Jennifer Bombardier.
"As retail continues to move online, we are thrilled to partner with Wayfair to provide customers with seamless, convenient financing," said Craig Vallorano, head of Citigroup's retail services business.
The Citigroup products include a store card that works only at Wayfair and its affiliated brands, and a co-branded card that works anywhere Mastercard is accepted, according to Bombardier. They both offer 5% in rewards on eligible Wayfair purchases and have a variable APR of 26.99%.
The co-branded card also earns 3% at grocery stores, 2% on online purchases and 1% on all other transactions. Customers can use the cards for no-interest financing if paid in full up for to 24 months on qualifying purchases or for major purchase plans, which come with a 9.99% APR for up to 60 months.