Credit card benefits are sometimes a key factor in luring customers to one card over another. Setting up an appealing rewards program from start can be difficult for small fintech businesses that are new to card issuing, since it requires the issuer to negotiate with specific retail partners and manage the difficulties of integration case by case. Kard offers a rewards-as-a-service model. For card issuers, API simplifies the process by allowing them to design a personalized rewards program targeted to their specific client base by selecting from Kard’s merchant relationships.
Kard handles partnerships with businesses who want to give incentives to promote their brands, making it simple for a new issuer to mix and match from Kard’s products and integrate those rewards into the issuer’s own user interface, according to CEO and creator Ben Mackinnon. Mackinnon developed Kard in 2016 as a platform for consumers to compare and evaluate rewards offered from various credit cards in order to maximize their spending, according to Mackinnon. After running into substantial challenges attempting to cater directly to credit card users without being ingrained in each user’s personal payment flow, the company moved to focus on a rewards API for businesses towards the end of 2019, he noted.
Traditional banks, as well as neobanks and banking-as-a-service fintechs, are said to be served by the startup. Varo and Marqeta were two of the first customers once the API was published in 2020, according to Mackinnon. According to Mackinnon, the firm currently works with about 30 issuers, representing 10 million users. According to Mackinnon, it helps handle roughly 60 million transactions every month and has seen revenue climb 10 times in the last year, though he declined to provide a particular revenue figure.
He sees the company as a two-sided rewards marketplace, with merchant relationships on one side and card issuers on the other. The API is useful for issuers because it “connects them to merchants, brands, and retailers who effectively represent the financing mechanism for any of their incentives,” according to Mackinnon. The attractiveness of working with Kard for retailers is its capacity to assist with client acquisition. According to Mackinnon, Kard exclusively charges merchants on a performance basis, which means it is compensated based on its ability to drive transactions for that particular merchant. He pointed out that the bulk of cardholders that deal with Kard’s issuer clients are millennials or Generation Z.
“Our clientele is really broad. We have a lot of customers that merchants today have a hard time reaching, so we’re a terrific opportunity for them to do so,” Mackinnon said. Kard produces money by dividing income with any retailer that decides to partner with the firm. Kard, according to Mackinnon, is a “contemporary” rewards network distinguished by its unique merchant connections. Issuers may get bitcoin, fractional shares of stock, lottery tickets, and incentives from local small companies using Kard.
The firm announced today that it has secured $23 million in a Series A round headed by new investor Tiger Global, with new investors Fin Capital and s12f also participating. The current fundraising was led by Underscore VC, which also led Kard’s seed round in 2020. In the next quarters, it expects to utilize the funds to grow its merchant network and develop new incentive and loyalty-related products, according to Mackinnon. By the end of the year, he expects to have tripled the size of Kard’s 25-person staff.
According to Mackinnon, traditional companies in the incentives industry have rewards programs that look and feel the same. Kard, on the other hand, is designed for issuers who wish to customize their products, according to him. “I believe [traditional players] offer] a terrific answer for firms that aren’t as interested in developing their own experience or aren’t as product-focused,” Mackinnon added. “An API solution like ours is basically the only way to achieve that today for issuers that want to develop and design their own experiences.”