Visa’s Flexible Credential

Visa announced a few things last week at their conference, but the one that caught my eye was the Visa Flexible Credential. At the risk of sounding like a bitter old man, they stole Wallaby’s circa 2012 tagline: “One Card to Rule Them All.”

In 2011, I had the idea to build a digital, cloud-based wallet that was accessed with a traditional physical card: The Wallaby Card. I’m sure many others have had this idea, but I ran with it, raising more than $1.6MM from the likes of FF Angel, WI Harper, and Mucker Capital to build this card. We launched a public waitlist in mid-summer 2012 and had more than 10,000 folks on the waitlist in just a few days. For its era, this counted as a huge launch.

The idea behind Wallaby was to use an algorithm and data, such as financial transaction data from a provider like Yodlee (Plaid didn’t exist yet!), to allow consumers to optimize their payment choices in real-time. We could optimize for rewards, cash flow, fees avoidance, or an intelligent customization of all of these.

Around the same time, several hardware-based thin wallet card solutions were announced, such as Coin, Swype, and Fuze. (I have a collection of these devices from their Kickstarters and similar ones on the wall in my office.)

I had lined up a sponsor bank and deep interest from a network. Google was also rumored to try something similar for an early Google Wallet iteration. Remember, there were no mobile payments in the U.S. at the time.

It was not meant to be. By early 2013, both major networks, Visa and Mastercard, had refused to participate in the setup. I remember receiving a call from an EVP at Mastercard, whom I had never spoken to before, telling me that all new digital projects were frozen. I made a go at working with Discover Network, but it never went anywhere.

Ultimately, I pivoted the company to provide payment intelligence via a mobile app, web browser extension, and web application. While I didn’t achieve my original goal, the business was successful, with a solid exit to Bankrate at the end of 2014 and a life-changing deal for me, my co-founder, and our team. (Investors made money, too!)

So, I was annoyed to see Visa acting like this is a new idea and using my tagline after killing the original innovation.

The new Visa credential aims to allow a user, within a single bank, to select via rules in their mobile app what transactions to send where, such as restaurants to Card A, small purchases to a debit card, and large purchases to a BNPL offering. Great. It’s a start. It is only sort of new, see Fifth Third Bank’s Duo Card from 2011 (no longer being offered) or cards that folks like Dynamics (another hardware offering) tried with Citi. By my estimation, more than $500MM has been sunk into this problem with venture capital dollars.

I think what consumers really want is cross-issuer intelligence. By coincidence, my friends at Kudos* announced their $10M Series A from QED this week. Kudos is a next-generation Wallaby, one that I am proud to advise and invest in, with a couple of former Wallabies on the team. It’s a great product, and I would love to see a Kudos card. Curve, over in the UK, has a digital cloud wallet, but it doesn’t really work here (because it’s so limited), and they are not allowed to steer algorithmically, which is what consumers want.

All that is to say that I’m not excited or impressed by this offering. It’s a good evolution, but it’s a long cry from the open network consumers desire.

Earned Wage Access Evolution

American Banker reported this week on a new card, Reset, that brings together concepts around Earned Wage Access (EWA) and credit. EWA exists to help consumers manage their money. Many employees are paid biweekly or twice a month but have daily cash flow needs. EWA provides a method to access those funds once you have worked but before you are paid. The regulatory interest and landscape for EWA are evolving, making certain models very hard to manage.

Reset is an income-linked charge card that uses a charge card structure to provide early wage access in a new way that appears to sidestep some of the typical challenges with EWA. The card earns interchange to drive its business and does not charge interest or monthly fees or ask for tips (a common fintech workaround). 

Reset joins a growing list of cards that span the credit-debit spectrum to help users manage their money covered in CardsFTW #57. 

Quick Notes

Yendo, one of several asset-backed credit card fintech startups (see CardsFTW #63), announced a new equity and debt round totaling $165MM ($15 in equity, $150 in debt). In today’s environment, that tells you that the model is working.

I might have missed it, but you can pay for NerdWallet now with NerdWallet Plus. Paying for the marketplace site is kind of wild to me, and NerdWallet says you can earn it back by getting financial products from them. I’m skeptical.

CardsFTW

CardsFTW, released weekly on Wednesdays, offers insights and analysis on new credit and debit card industry products for consumers and providers. CardsFTW is authored and published by Matthew Goldman and the team at Totavi, a boutique consulting firm specializing in fintech product management & marketing. We bring real operational experience that varies from the earliest days of a startup to high-growth phases and public company leadership. Visit www.totavi.com to learn more.

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*Indicates a company with which Totavi has a financial relationship.