CardsFTW #43: The Coming Decade of Credit

December was a long and busy month. My New Year’s Resolution for 2022 is to get back to writing CardsFTW most weeks. Thank you for being a loyal reader!

I’ve been saying that the past decade was the decade of debit card products. While the rise of debit started in the late 1990s as check cards grew beyond ATM access devices to the debit cards we use today to spend from deposit accounts, the explosion in debit-card-focused providers didn’t take off until the past 10 (or even five) years.

The reloadable prepaid card debuted in the early 2000s with pioneers like Green Dot and Netspend. Chime, founded by my former Green Dot colleague Chris Britt in 2013, and SoFi, founded in 2011, have grown to massive valuations, huge customer bases, and a growing suite of products centered around an everyday spend account and debit card.

Over the past year, these companies have stretched into credit products. Chime, in particular, is throwing massive marketing muscle against its credit builder card. SoFi has a compelling rewards card product for its more up-market customer. Every day, we’re seeing more and more fintech companies launch cards, whether crypto-focused like BlockFi’s super successful rewards card or credit-building-focused like Chime’s card.

The trend I see is the trend to credit cards vs. debit cards. Consumers in America want and need credit. While credit cards are substantially harder to operate and set up due to the core addition of lending and regulatory requirements, they are an in-demand product. According to the Federal Reserve Bank of New York, credit card applications have hit a high since the pandemic started.

Fintechs with cards are adjusting them, such as BlockFi’s new rewards flexibility. Other startups are adding credit cards to debit solutions, such as Point’s Titan Card. More telling, several startups are skipping over debit to go directly to credit, including Status Money and TrueBill. (Each of these cards is pre-launch/waitlist; more thoughts as we get closer to launch.)

Meanwhile, the traditional issuers continue to work on new and revised offerings. In the past month, we saw many launches: Alliance Data (Comenity Bank) announced a new NFL card program, winning the program away from Barclaycard. Bank of America announced its long-rumored Premium Rewards card. On the business side, Chase announced a new Chase Ink card that is a charge card vs. revolving credit and extremely strong rewards.

These individual signs point towards a coming decade where it is easier than ever to issue a credit card due to program managers and modern processors like Deserve, Railsbank, Marqeta, Galileo, and many other stealthy or soon-to-launch fintech providers. Companies will launch, iterate, fail, and succeed. It took a lot of failed neobanks to see today’s huge success with Chime and others. It will take this same experimentation for fintech companies to find a way to compete with legacy banking issuers effectively. It will be fun,soon-to-launch and 2022 is still in the first part of the story.

Work with Me!

Apto Payments is on a huge growth streak, and we are dramatically expanding our team. We have roles in Growth, Engineering, and Product. I am building a world-class payments product team in my new role as Chief Product Officer. Please take a look at our roles and join me to help brands issue cards and embed finance in their products.

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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.