Why more tech companies are suddenly launching credit or debit cards

If you live or work in Singapore, you’d be hard-pressed not to have noticed the number of credit or debit cards launched by tech companies in the last year alone. A response to consumer demand, you might guess? You’re only half right.

While it’s true that fintech startups are rolling out a lot of interesting new applications that sit on top of existing credit or debit cards, part of that initiative is actually being fuelled by payment giants like Visa and Mastercard.

To get a piece of the action, these well-established players are offering significant support to entice fintech firms into co-launching products that feature their famous logos, according to people that Tech in Asia spoke to.

Because Visa and Mastercard earn from transaction fees, they have a business model that’s dependent on payment volumes. As such, they can’t afford to ignore startups like UK-based TransferWise, which moves over US$60 billion in transactional volumes a year.

“In order to become a [card] issuer, there has to be massive backend capability – you have to invest in very secure servers. [Payment networks] are now starting to subsidize a lot of those costs,” Shailesh Naik, CEO of digital card issuer Matchmove, tells Tech in Asia. The result is that consumer cards are becoming increasingly commonplace.

Simplifying cross-border transactions

In one camp are travel cards focused on helping users circumvent cross-border transaction and currency exchange fees, which are usually more costly when charged to bank cards. First to launch in Singapore was YouTrip’s multicurrency wallet in August 2018. The Lion City is a sizable market, with Singaporeans racking up some US$27.3 billion in overseas expenditure via cards and cash each year, according to a study from economics research consultancy Capital Economics.

Apparently, other companies had the same idea. Just a year after YouTrip’s entry, the travel e-wallet market is becoming crowded: TransferWise and challenger bank Revolut have issued debit cards of their own.

A YouTrip user’s card / Photo credit: @valerietthy

Super apps and even ecommerce platforms are also cashing in on the space. Grab is currently beta-testing its GrabPay Mastercard in two pilot markets, Singapore and the Philippines. Meanwhile, Citibank has two new co-branded credit cards: one with Grab, which was rolled out in Thailand and the Philippines, and another with ecommerce player Lazada,which gives users access to exclusive discounts on the platform.

Branded cards can certainly help platforms boost loyalty among consumers, especially when you count the discounts and cashbacks that users can get. They can also bring in Southeast Asia’s unbanked population, who are gradually going online and need a way to purchase goods and services digitally.

What’s changed?

There’s more support these days for companies that want to launch their own cards.

Visa and Mastercard are finding more ways to engage startups, including running acceleration programs, offering strategic counsel and advisory, and flexible commercial agreements.

Super apps are issuing cards too

Cards are becoming more similar

Cards of the future