CardsFTW #40: American Express Launches Debit

The big news this past week is American Express’s entry into traditional debit cards for small businesses. American Express has traditionally been a lending company with charge cards (Green, Gold, and Platinum) and a later expansion into revolving credit cards. Aside from a small distraction in prepaid with Bluebird, the company has long avoided traditional debit spending accounts, although they offer a savings product.

Now the company is launching a fully-featured business checking account. It looks to be a good product with a signup bonus ($300), a 1.1% yield up to $500,000 in balances, and no minimum fees or balances. Coming in early 2022 iteration, American Express promises to bring its flagship Membership Rewards program to the checking account as well.

The program looks and feels like a modern fintech offering, and Amex references its acquisition of Kabbage in the press release. There are relatively few fees with only outgoing wires ($20) and an FX fee on international purchases. The card sports a vertical design. That’s how you know it’s cool and fintech-y.

American Express needs to continue to find ways to grow, and it is a bank. They have a solid technology stack and an extensive network (and can use tools like MoneyPass to enable broad ATM access). I think the business checking account will be a winner.

Affirm Debit… PLUS

Speaking of debit cards, Affirm relaunched its debit card offering with a revamped Affirm Debit+ card. The card allows users to make purchases at any card-accepting merchant and convert them into buy-now-pay-later loans (BNPL). I’ve been writing about BNPL for many weeks, and I’ve been writing about the advent of debit cards that help build or access credit through a charge or installment loan. The new Affirm product is another excellent example of how the lines between cards, BNPL, and credit are blurred.

With the Affirm debit card, users avoid opening a credit account and can split purchases into multiple payments within 24 hours of making a purchase. Most purchases over $100 are eligible, with few exceptions. The spending limit on the card is based on a linked underlying bank account, making the card primarily function as a decoupled debit product. You must have available funds to cover your purchase in whole, it appears, even if you choose to split the purchase into payments.

I’ve been counseling startups and other companies to consider how to use debit as a faster method for moving funds for BNPL and loan disbursements with this sort of attached credit capability. Building an actual open-loop credit card is still very hard, and this is a faster, easier, more understandable path for many use cases.

On a related note, Marqeta and Amount announced a partnership to help banks provide BNPL later services by utilizing virtual cards. Amount helps banks be more modern and launch new products, and virtual cards and BNPL are two very hot topics.

Bringing these two together, I just have to point out that American Express’s CEO says BNPL isn’t a threat to credit cards. I agree; this can all live together.

Quick Notes

Mastercard is partnering with Bakkt to bring crypto everywhere. Bakkt has been on a tear with various partnerships and a SPAC to top it off. The company started with a silver spoon through its stock exchange heritage and is rapidly building extensive features around cards, crypto, and loyalty. As with many of the big network plus crypto announcements, there are a lot of details left to be explained and understood, but the message continues: crypto is going mainstream, and cards help crypto connect to the real world.

Marqeta announced it would power new commercial card programs for Bill.com’s financial institution customers. This one surprised me a bit given Bill.com’s purchase of Divvy, which would seem to be a direct competitor in a way, as well as that Divvy, operates on top of Wex Bank/Wex Card. Divvy and Bill.com are two big businesses, so they can indeed co-exist, but it does make me wonder if a deeper Marqeta/Divvy integration may be in the future.

Mastercard also announced new accessible card designs for visually impaired users. These unique designs help users differentiate across multiple cards through changes in shape. These designs are simple, intuitive, and helpful. Kudos.

Finally, TransUnion released data showing that Gen Z customers do acquire credit cards. I have long maintained that credit adoption in younger generations is more due to their age and wealth than generational shifts alone. Both originations and balances for Gen Z consumers rise as they gain credit history and wealth. Cards aren’t going anywhere (as a concept, physically, maybe they are!)

CardsFTW

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.