Cards #47: More Brands with More Cards
ADS rebrands to "Bread," New Gemini Card, and More
A Programming Note
First, welcome to many new readers. Second, I will acknowledge that it has been more than two months since a CardFTW was published. Let’s just say that the tremendous growth at Apto Payments, where I am Chief Product Officer, has been keeping me busy. I am fortunate that a ton of great people joined Apto over this past few months and with their help, I am looking forward to finding a few hours each week to put this together.
Many New Cards for Many Brands
I’ve been writing for a while now about the growth in co-branded cards. There are a number of providers out there working to make it easier for smaller brands to issue co-branded cards. These new technology first companies partner with a chartered bank to issuer cards and we refer to them as (Credit) Cards-as-a-Service providers ((C)CaaS) , Banking-as-a-Service providers (BaaS), card program managers, or similar. Many CaaS/Baas providers issue debit cards only, although we are seeing more issuing credit only or credit and debit.
The new fintech players experience continued competition at the top end of the market from traditional co-brand bank issuers. These issuers include American Express, JP Morgan Chase, Capital One, Comenity, Synchrony, and Bank of America (among others).
Regional banks, such as Commerce Bank, or Fifth Third Bank, may issue some co-brand cards, but in general, they are geographically focused or the programs are on the smaller side.
In the past few years, there has been tremendous investment into the CCaaS space. Early leaders such as Deserve are seeing growing competition from companies such as Cardless, Zeta, and Imprint. There are a number of other founded, but not yet launched providers in the space. Each company is looking to reduce the cost (time, complications, money) to launch a co-branded credit card.
Many of the customers of these CCaaS providers are other fintech companies. Some are looking at the card as their entire product, while others are adding or embedding a credit card in a broader fintech experience.
Using a traditional issuer or a CCaaS provider allows a brand to have a single agreement for all card services. The provider is a program manager, who addresses issuing, risk, lending, compliance, customer care, card printing, and more. In some cases, like with a major issuer, much of this is done in-house. In other situations, like with a fintech CCaaS, the program manager is a layer and outsources or contracts many underlying components.
Traditionally (that is, three or more years ago) a fintech company that wanted to issue a credit card had to do ten or more deals to set up a credit card program. The fintech would need deals with a chartered bank, a card network, a card printer, a capital provider, a customer care provider, an underwriting service, etc. Some fintech companies continue to pursue that today and in the launches of the last few months, we are seeing all of these variations.
I am thrilled to see all of the new cards. In addition, we continue to see large brands add or switch co-brand issuers. We do not yet see a fintech CCaaS provider winning a major deal. I don’t think the economics could work out (yet) as the cost of capital component for a fintech CCaaS is simply too high to compete with larger banks, which also have massive economies of scale in processing and service.
The credit card space is growing. Bloomberg reports that the U.S. has more credit cards than ever before in the market, with 196 million Americans holding credit cards. We will see what impact the economic challenges of 2022 will bring.
New Credit Cards & Deals
Imprint is a new CCaaS provider and has launched the WeWoreWhat Rewards Visa Card, which is a co-brand with an influencer. (Seems like a first.) Imprint also announced the Selina Rewards Visa Card, for a smaller hotel brand (never heard of these hotels personally). Imprint partners with First Electronic Bank to issue these cards.
Bread was a fintech that was acquired by Alliance Data Systems (ADS), which also owns Comenity Bank. The larger entity rebranded itself to Bread and is launching a branded card of its own. Historically, ADS offered service to retailers and issuers and issued co-branded cards for major brands, but not its own direct-to-consumer offering.
The new Bread Cashback™ American Express® Credit Card is a 2% cashback rewards card issued by Comenity on the American Express network. (Most of the time American Express cards are issued by American Express itself, but there are a few banks that issue cards that run on the American Express network.)
Capital One announced that it won the Major League Baseball official bank and credit card sponsor deal. Baseball is weird, though, as each team is able to issue cards with local banks or others. The Marlins, for example, have a new card with fintech provider Cardless. Cardless provides a few different athletic cards including the Marlins, Boston Celtics, New Orleans Pelicans, Liverpool FC, and others.
Wells Fargo and Bilt Rewards bring a fintech and traditional issuer together as the Bilt Rewards card (see CardsFTW #31) moves from Evolve Bank & Trust to a new issuer.
Gemini, a major bitcoin exchange, announced its Gemini Credit Card, which adds an additional crypto rewards card to the market. The card is issued by WebBank and not running on a CCaaS. With no annual fee, the card earns 3% cashback on dining, 2% on groceries, and 1% everywhere else. The cashback is redeemed as one of up to 60 cryptocurrency types (including Dogecoin!). Comparing itself to BlockFi’s very successful card, the Gemini card has instant rewards, with the crypto deposited on transactions into the user’s accounts.
A few quick notes on interesting new debit card launches over the past few weeks:
American Express announced a new Rewards Checking product. The card earns both a higher than average APY of 0.50% and earns cardholders one Membership Rewards point for every $2 spent on eligible purchases. There are very few rewards card products in debit and this is compelling if you are a debit card user.
Robinhood is making a new go at spending with its new Cash Card. The new product adds some stock market-eque uncertainty to everyday spend with weekly bonuses between 10% and 100% for invested spare change from round-ups.
Thanks for reading CardsFTW, a weekly-ish newsletter about all things debit and credit. CardsFTW is written and curated by Matthew Goldman, Chief Product Officer at Apto Payments. If you’re looking for insights into everyday payments beyond deal blogs, please subscribe for free at cardsftw.substack.com. If you enjoyed this, please share it with a friend! Follow me on Twitter @magoldman.