Brim, Caary, Cypto.com, Float, Jeeves, Neo, Nexo: traditional banks are now facing fierce competition in Canada, with the arrival of a multitude of credit cards from financial technology companies (fintechs). And finding your way around is not always easy.
• Read also: Top athletes want to be paid in cryptocurrency
• Read also: You can heat your home by mining bitcoins (if you’re patient)
Can you use your bitcoins to buy milk at the convenience store with your usual credit card? Probably not. As you may have seen in an online ad, the cards from Crypto.com and Nexo allow it. Other such cards offer original loyalty programs, receive payroll two days in advance or can be obtained in just a few minutes.
It’s not for nothing that these next-gen cards are now appearing everywhere. Not only are there many, but if you also have the misfortune to search for one on the web just once, you will be inundated with advertisements for months to come.
” The fintechs are generally funded by venture capital. They can lose money for each client they acquire, so they are aggressive, ”observes Julien Brault, CEO of Hardbacon, a portfolio management application.
These cards are subject to the same rules as those of traditional banks. “A company that decides to move into the variable credit market (which includes credit cards) will have to comply with all the rules provided for in this regard,” confirms Charles Tanguay, spokesperson for the Office for the Protection of consumer.
For legal reasons, these cards are also issued in partnership with traditional financial institutions, generally smaller banks unknown to the general public, such as Peoples Trust and Digital Commerce Bank.
Advantageous? It depends for whom
Almost all fintech credit cards offer nice mobile apps that keep spending in a smart and efficient way. “However, we do not change credit card because an application is more beautiful,” says Julien Brault.
To find what it takes in this new market, consumers must shop around for unique offers and features. fintechs, which vary greatly from card to card.
Brim, for example, sets itself apart with its offers for travelers and families, since no fees are charged on international transactions and each additional free card can be easily checked (block a card with one click, or prevent online shopping, for example). Neo, for its part, specializes in shopping, with higher-than-average discounts from its partner businesses.
“Overall, prepaid cards popular with fintechs are less advantageous than regular cards, ”notes Julien Brault, however. It makes sense: it’s after all with their high interest rates that credit cards make money at financial institutions, and prepaid cards don’t borrow money.
There are still exceptions, depending on the benefits sought. For example, the Koho prepaid card offers a complete application, with electronic transfers and budget monitoring, but above all a feature to rebuild your credit, by paying $ 7 per month.
Prepaid credit cards like those from Crypto.com and Nexo allow you to fund your account with cryptocurrency, and even withdraw money from your bitcoin or ether wallet at any ATM.
The slowness of the banks and the money of the fintechs
The arrival of credit cards from fintechs can be explained by several factors, most notably the slowness of banks to adapt, the explosion of financing and the maturing of a new technological ecosystem.
The fintechs have indeed benefited from the banks’ lack of opportunism to meet certain needs, such as the integration of cryptocurrencies. “Banks have also misused the market for prepaid cards for people with bad credit, and fintechs have taken advantage,” adds the CEO of Hardbacon.
About $ 950 billion has also been invested in fintechs over the past decade. These investments have notably enabled the development of technologies designed to facilitate the implementation of credit cards. Swipe.IO, for example, provides virtually all of the infrastructure needed to issue virtual and physical cards and pay in over 30 countries around the world.
“It would have been possible to create a new credit card five years ago, but it would have been difficult. Today, it’s simpler, ”notes Julien Brault.
In other words, it’s best to get used to the arrival of new cards from fintech companies, because that’s probably just the beginning.