The credit card market has become increasingly crowded, with consumer fintech startups locked in fierce competition to differentiate their offerings through branding, rewards programs, and even crypto compatibility.
X1 Card takes a different approach by insuring customers based on their income rather than their credit scores, allowing the company to set credit limits up to 5x higher than traditional card providers, according to the company. It is an attractive proposition for all kinds of people with stable incomes but low credit scores, such as recent graduates.
“For someone like me, who came from a completely different country, a credit score, especially early in my career, isn’t a true reflection of my ability to repay,” co-founder and CEO Deepak Rao told londonbusinessblog.com in a statement. interview.
The card, which charges no annual fee, has managed to grow to $50 million in monthly transaction volume in the past six months after rolling out the product to a limited number of beta customers, Rao said. Now, armed with $25 million from a new round of funding, the product is launching to the general public.
FPV, a new venture from Google Analytics founder and early Robinhood and Plaid investor Wesley Chan, led X1’s round, marking the VC’s first-ever investment. Existing investors Craft Ventures, Spark Capital, Harrison Metal and SV Angel all participated along with new investors Abstract Ventures, the Chainsmokers and Global Founders Capital, according to X1.
The new funding comes after X1’s latest $12 million raise in January 2021, which covered londonbusinessblog.com.
Chan said he supported X1 despite his initial skepticism about investing in a credit card, especially during a recessionary period in the economy when consumer spending is falling. He was drawn to X1 for its simple interface, excellent customer service, and robust risk management controls. X1 connects to users’ bank accounts through Plaid’s API to collect data on their income patterns, enabling it to insure customers without the need for a credit score.
X1’s waiting list has “nearly a quarter of a million” people, Chan said, adding that hearing users who were excited about the card’s interface helped win him over.
All of X1’s marketing is through word of mouth, Chan said.
“There’s no annual fee like these other credit card companies have to pay for their ridiculous marketing,” Chan said, explaining that for most credit card companies he considers an investor, these fees directly cover advertising costs.
The card offers other easy-to-use features, such as 2X points on all purchases (3X if you spend more than $15K per year) and an offer tailored to families looking to earn points together. Rao said he plans to use the latest funding to add even more new products and features to the card.