Money, in Perfect Vision - CardsFTW #129

A Programming Note

Late-night parties at Money20/20 delayed the publication of last week’s newsletter to, well, today. We’ll also publish a special edition on subscription payments later this week. Enjoy!

Money20/20

Long-time readers know that I love the Money20/20 conference. This year, I received an email from the organizers about how it has grown from a small gathering of “fintech fanatics” to today’s successful conference with over 10,000 attendees. I thought to myself, “I’M ONE OF THOSE FANATICS!” I’ve attended Money20/20 every year, save one, since its debut in 2012. It continues to provide some of the most fun, productive, and insightful days of my professional year.

Last year’s show was a bit of a downer, though. To be frank, 2023 was not a great year to be in fintech. We experienced massive highs and a flood of cheap capital in 2021 and 2022, with fintech startups raising obscene amounts of money at absurd valuations. In 2023, the bottom fell out. Funding stopped, crypto crashed, and scams were exposed. It just didn’t feel as much fun, and there were far fewer parties. 

This year, I asked everyone how they felt about this year’s show. The answers were encouraging: less depressing, looking forward to 2025, and noticing a more upbeat atmosphere. I felt that, too. 

I think fintech needed a shake-out. Unfortunately, as covered by many other excellent newsletters, there were (and still are) a lot of scams and bad behavior out there. We haven’t cleaned it all out, but we’ve made significant progress toward a reset. I continue to believe that there is a lot of opportunity in fintech and the business of money and money movement. Some key evidence lies in some of the startups highlighted by the show, a few of which I am excited about:

Eisen is a modern solution for off-boarding and escheatment. People leave accounts behind everywhere and it's a huge headache. I’ve been talking to people about escheatment checks for almost 20 years. It's a great example of a boring problem made relevant.

Casap is helping programs and banks manage disputes and chargebacks. Much like Eisen, this is an area where people have long settled for the status quo when there are better ways to tackle problems and turn a pain point into something positive.

Ntropy is using AI to structure and standardize unstructured financial data. Sounds better than hiring a team of people. It’s been interesting to watch Ntropy’s evolution from a transaction enrichment product to something bigger.

Brightwave is using AI for financial analysis. I recently wrote that WealthTech is the new fintech, and Brightwave is a great example of this. Computers are well-suited to ingest huge amounts of information and identify investment opportunities.

In addition to a positive general feeling and some exciting young companies, three themes stood out to me at the show.

AI. I mean, can you go anywhere without talking about AI? Nvidia had a booth. That was different. We often joke that the booths tell you what is hot. Crypto booths? Mostly gone. Even stalwarts like Zeta and Marqeta reduced their presence. Data and AI? Everywhere. I’m not sure AI can really “think” (try asking it to solve a first-grade word problem), but it can be a huge help in so many tasks.

1033. Speaking of data, the promulgation of the final rule in open banking arrived just before the show and was a hot topic. One interesting angle near and dear to me is the implications of open banking for loyalty and rewards. Whoever would have thought that the CFPB had opinions about your airline miles?

Secured Cards. People are realizing that building credit is hard, and most of the so-called credit builders don’t work very well. Secured cards, however, are a proven tool and ripe for disruption. More companies are going to launch secured cards this year (and if you have questions about this one, give me a call!)

Before I move on from Money20/20, I want to thank all the dozens of people who met with me and my team. We had a blast reconnecting. Thank you to the folks who attended our event. Finally, we were excited to debut our latest Goldman Socks efforts: Buy Low/Sell High and BAAS. Use code “Diversify” to save 20% on these today.

Novo Launches a Small Business Credit Card

Novo, which provides a platform for small business banking, announced the launch of its business credit card, issued by Continental Bank on the Mastercard network.

Business credit is an area where I expect to see strong growth over the next few years, as the economics tend to be favorable compared to consumer products. There is a huge underwriting challenge here, although Novo requires you to have a deposit product to get a card, so I assume they are looking to have a deeper relationship that drives more intelligence to underwriting.

Novo’s customers are solo entrepreneurs or micro businesses, which is clear from their comparison table, which puts Novo against personal cards. I don’t buy all their examples (comparing their no-fee card to the Amex Platinum at $695), but they are correct that business perks and separate spending are important.

Credit Card Perks Updates

A recurring theme in this newsletter is the expansion of perks tied to cards. I wrote recently about how you can leverage your Amex Platinum to get Walmart+ to get Paramount+. Do you also know doing so will give you free access to Pawp (24/7 virtual vet) and discounts at Burger King? Amazing.

The perks are starting to trend to less expensive cards as well. Fidelity’s Visa Signature card, which has a 2% cashback reward structure and no annual fee, is now offering a fee offset to TSA PreCheck, previously something you could only find on an expensive travel card. The U.S. Bank’s Altitude Connect card is the same. (Hat tip to Andrew Davidson at Mintel for this one).

Chase Sapphire Reserve cardholders have long enjoyed benefits with DoorDash. Although the perks are always set to expire, they keep extending it. Now, starting in February of 2025 a simple $5 credit has been replaced with $5 to restaurants or two $10 credits to grocery or retail. I guess DoorDash’s 2025 OKR is to increase grocery and retail orders. OK by me.

What all this shows us is that credit cards are expanding way beyond the value proposition of payments and short-term financing into a lifestyle access platform for businesses to reach, market, and reward consumers across brands. Much more to come here in the coming years.

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.

Interested in reaching our audience? You can sponsor CardsFTW.

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