The crowded U.S. credit card industry, with 10 top players, and more than 4,000 small and mid-range issuers, will face new competition as Revolut plans to enter the market. Credit cards will be one of the products in the fintech’s North American launch.
Revolut is a London-based unicorn funded by Softbank and Tiger Global. According to the firm’s website
- In 2017, Revolut’s co-founders Nikolay Storonsky and Vlad Yatsenko, decided to disrupt business banking. Now, the financial super app with over 15 million customers worldwide is celebrating its one-year anniversary in the U.S. with the announcement of a major milestone – the launch of Revolut Business in all 50 states.
- After successful roll-outs across Europe amassing over 500k sign-ups globally, Revolut brings its innovative business accounts to the U.S.
The financial super app lets companies sign-up for multi-currency accounts in minutes, get company cards for teams, make money transfers in 28 currencies at no cost to pay suppliers, partners or employees overseas, and all at the interbank exchange rate with no hidden fees.
Revolet has potential. CNBC noted:
- British fintech firm Revolut said it had raised $800 million in a new funding round led by SoftBank and Tiger Global.
- The round values Revolut at $33 billion, a sixfold increase on the $5.5 billion the company was worth last year.
In an earlier press release, published in 2018, the CEO put a stake in the ground with an ambitious goal.
Barron’s interviewed Ron Oliveira, Revolut’s U.S. CEO, who announced the fintech’s credit card market entry; the journal called Revolut” U.K.’s most valuable tech startup” and planned to “crack America.”
Bring it on, we say. The U.S. is a resilient payments market. But it will not be a cakewalk as other fintechs who have tried it as N26 might tell you.
But, understand the nuances of the U.S. payments market. Unlike the U.K., U.S. companies look for value-added product features. In the land of high interchange, that expectation is that individuals and businesses demand reward features, something uncommon, or at least fractional, in the European market. You will find similar controls for clarity and fairness, but ensure that you stay within the guardrails or expect to see the OCC or CFPB knocking at your door.
In this market, the ten top-tier financial institutions drive the market, but sometimes community banks, regionals, and credit unions fill customer needs just as well. Like every other market, the United States is in COVID recovery, and the fact that deposits are substantial, risks are low, and the market is already moving towards digital. might mean the timing is perfect
So, Revolut, welcome, and brace yourself. The United States market is a market receptive to innovation but highly competitive. Bring your best game!
Overview provided by Brian Riley, Director, Credit Advisory Service at Mercator Advisory Group