CardsFTW #41: Capital One Venture X Debuts

In the last issue, I mentioned the launch of the X1 credit card, a new fintech offering with a rich rewards program, a promise of better credit limits, and, as they emphasize, a hefty (17g) metal card.

Not long after I published #40, Capital One announced their new Venture X Card, the latest in their travel rewards program. What’s with the Xs? The new Capital One card is also going in hard for the premium crowd. The core offer includes 100,000 miles when spend $10,000 in the first six months, 10,000 miles each year, and a $300 travel credit towards booking on Capital One Travel, with a $395 annual fee. Appropriately used, this could be a net-zero cost premium card and clocks in below the steadily upward creeping $450-700 premium cards such as Chase Sapphire Reserve and American Express Platinum.

The Venture X card earns 10X points on hotels and rental cars booked through Capital One Travel and 5X on airfare booked through the travel portal. Cardholders earn 2X points everywhere else. The card is a Visa Infinite card, Visa’s top tier of consumer credit, and includes many other perks and benefits.

Capital One’s miles program has improved over the years. Initially, the miles were simply cashback points masquerading as miles by name. Today these miles operate more like traditional multi-currency programs of American Express Membership Rewards and Chase Ultimate Points with the ability to use as cashback credits or transfer to any of 15 travel loyalty programs, including British Airways, Air Canada, and others.

My initial reaction to this card was not super positive. Frequent travelers seeking elite status typically prefer to book directly with the airline, hotel, or rental car agency as that is the best way to ensure you’re earning miles from that spend. Many of the rates consumers get through third parties like Expedia, Hotels.com, or Capital One Travel may be limited from earning points.

After further reflection, I find this card much more compelling. I struggle with the high annual fees on several of my cards, especially given how much less I travel now. The transfer partners aren’t as strong as Chase or American Express, but savvy travelers know how to book certain domestic flights with this heavily international partner list.

I continue to be optimistic about the pace of innovation and the introduction of new cards. I am glad to see another major bank coming in with a lower fee, which should help consumers keep a lid on the ever-rising annual fee problem. Robust offerings from the major issuers will provide heady competition for challenger travel startups unless they can hack the system to provide substantially richer benefits given a shared industry limit on interchange revenue. I don’t think metal cards will do it all for a user, but a nice card and a nice reward program will drive adoption.

Zip Is Just Another Way to Say Zero

It seems that every week there is news to report in the buy-now/pay-later (BNPL) and credit cards discussion. Zip, formerly known as QuadPay, announced its launch of the Zip Card. Zip Card is not a regular credit card, but, like the Affirm+ Debit Card, it allows a user to load a BNPL disbursement to the card. The user then has to repay those funds in 4 payments or less. Fees may apply (e.g., they may not be zero).

Setting up a Zip account is fast and simple, with immediate delivery of a virtual Visa Card number and the ability to request a physical card. WebBank, an Industrial Loan Charter bank in Utah. It looks like the card is a Visa BIN, although I can’t be sure from the ApplePay view.

So when is a credit card not a credit card? When is a loan not a loan? The answer is complex and varied, and I am not a lawyer. I’ve been spending a lot of time talking about this with folks. How can I lend you money, but it isn’t a loan? Why can I check your credit with a soft pull when lending? How can I report on your credit without a loan?

The answer is in so many details. When we buy something, nothing says we have to pay immediately; it is just how modern society has evolved. When we buy something and don’t pay immediately we just create a promise to pay. These promises occur all of the time. They don’t make loans, but you can still charge a late fee if you don’t pay on time. They can also report your payment (or non-payment) to the bureau.

My favorite example here is your utility or phone company. You promise to pay them, and if you don’t, they sure report it to the bureaus. That said, they aren’t really giving you a loan. BNPL, in particular, because of its structure in size and number of payments, is not a loan.

Either way, it’s confusing for consumers who have to keep track of how each card works.

Quick Notes

A few other notes that stuck out to me in the past couple of weeks:

Airbase, a corporate spend platform with a card, is going aggressive in rewards to compete with the likes of Brex and Ramp, promising to return nearly all of the interchange income they receive to their customers, including on their free tier. Pre-funded (debit) card users will earn 2.25% cashback with charge users who have 30 days to pay receiving 1.75% cashback. That’s a pretty good rate.

Flexbase, a payments platform for the construction industry, announced its credit card offering. The card provides a line of credit and a deep integration to Flexbase’s platform to track and manage spending. The corporate card world will increasingly look like this: industry-specific solutions embedding a card in their service instead of companies acquiring separate cards from traditional financial institutions.

Finally, the New York Fed released a study showing that US credit card use has returned to pre-pandemic levels. Between inflation, rising wages, and new spending patterns, Americans are out there shopping! Overall debt balances remain substantially lower (reflecting more debt paid off), but lots of volume is running through cards as purchasing volume continues to digitize.

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.