With the total value of all cryptocurrencies reaching $2 trillion, many so-called Bitcoin billionaires have cash to burn, but they may not have enough traditional banking relationships to establish a strong enough credit history.
PointCard seeks to serve this niche with a $399-a-year charge card called Titan that vets applicants by looking at their crypto holdings, savings and other investments instead of their credit scores.
“Traditional credit bureau scores don’t measure cryptocurrency, which is a disconnect for a lot of young tech executives and entrepreneurs heavily involved in crypto,” said Patrick Mrozowski, CEO and co-founder of PointCard, which announced the Titan card this week.
PointCard does not perform a hard credit check on Titan applicants, nor does it impose a spending limit. Because it is a charge card, users must pay their balance in full every monthly billing cycle.
“The charge card model fits our customers’ lifestyles better than a credit card, because they may spend a lot one month, and not as much in another month — it’s a more realistic approach to how emerging young affluent investors live,” Mrozowski said.
There are no late fees; additional transactions are blocked if customers don’t pay on time, he said.
PointCard’s new card marks the latest pivot for the startup, which launched in 2018 and previously offered a Mastercard-branded debit card.
The San Francisco company has raised $60 million to date, most recently with a $46 million infusion in September 2021 from backers including Breyer Capital. Column N.A., a $343 million-asset bank in Chico, California, is the issuer of PointCard’s separate debit card.
“We started with the idea of a tech-focused debit card, but we changed gears last year as we’ve watched the crypto ecosystem evolve,” said Mrozowski, 25, a Y Combinator veteran who co-founded a Bitcoin app called Crumbs in 2016.
The card's rewards are heavily focused on cryptocurrency. Like other recent crypto-linked credit cards such as the BlockFi Visa and Gemini Mastercard that reward users in crypto purchases, the Titan Visa card provides crypto as part of its rewards plan.
The Titan Visa card offers up to 5X points redeemable for cash or crypto — stored in a custodial wallet — for everyday purchases including electric vehicle charging.
PointCard is part of a new wave of cards like Petal (which caters to consumers with thin or blemished credit histories) that eschew traditional credit histories in favor of alternative data sources such as cash flow, said Brian Riley, director of credit advisory at Mercator Advisory Group.
But using a charge card model could present challenges for PointCard by limiting its revenue primarily to interchange, especially because PointCard doesn’t plan to charge any fees other than its annual fee, Riley said.
“Even American Express, which built its business around a charge model, migrated to a revolving-credit model to increase cardholder flexibility,” Riley said.
Card startups typically have a tough time carving out a niche — even Petal is now
“Although the card offers solid rewards because it’s categorized as Visa Infinite, they will likely find resistance for their whopping $400-a-year fee,” Riley said.
