Comparing the Growing List of FinTech Debit Cards
It’s hard to believe there was once a time when your payment options were mostly limited to cash, credit card, or the dreaded check. Finally the debit card was introduced, giving customers access to their checking funds via a piece of plastic that looked and functioned much like a credit card. While the majority of consumers now cite debit cards as their preferred form of payment, there are many ways in which traditional debit products are lacking.
Enter the scrappy FinTech startups, who have strived to create better financial products for Millennials and everyone else. Noticing that most debit cards came with several fees and no real perks, a recent trend finds peer to peer payments apps, micro investment tools, and other FinTech firms introducing their own twist on debit cards. In addition to erasing many of the most common fees that customers incur, some of these cards also add some enticing bonuses to lure new users.
With that, let’s take a look at the growing roster of FinTech debit cards, including some of the best perks each one has to offer.
PayPal Cash Mastercard
Biggest perk: Easy access to PayPal funds
Peer to peer payment services are an obvious app type to introduce debit cards as many users carry a balance in their accounts. With that in mind it’s really no surprise that PayPal offers a debit card that allows users to access their funds and spend them wherever Mastercard is accepted. On top of that, cardholders also have access to 33,000 MoneyPass ATMs nationwide with no fees.
Aside from those basic features, the PayPal Cash Mastercard doesn’t have much else to offer. In fact it’s actually one of the least intriguing products on this list. Then again, given PayPal’s long history and mass popularity, the company might not have to resort to gimmicks to gain users like some of the younger startups.
Biggest perk: Easy access to PayPal funds
Like PayPal’s debit card offering, the biggest selling point of Venmo’s card is the ability to access you Venmo funds without having to transfer them to an external bank account. Moreover a website promoting the offering notes that using the Venmo card makes it easy to track your purchase and split them with your Venmo contacts. Plus, if you’re in need of cash, the card also provides fee-free access to MoneyPass ATMs.
Being the younger, hipper alternative to PayPal that it is, Venmo’s debit cards come in a variety of bright colors such as yellow, pink, blue, and green in addition to the more standard black and white. Interestingly, although the PayPal Cash card alludes to foreign transaction fees, Venmo’s FAQ notes that the card can only be used in the U.S. This also means that you can’t use your Venmo card to purchase from a foreign retailer online, even if the transaction is made in USD.
Once again, there’s not a whole lot to Venmo’s debit card. That said I can easily seeing it being of value to hardcore Venmo users. At the end of the day it is free so, if you’re interested, go for it.
Square Cash Card
Biggest perk: Boosts (Discount offers)
Another peer to peer service that’s diversified into debit cards in recent years is Square’s Cash app. Although Square is best known for its small business payments and point of sales solutions, the company launched Cash as a rival to Venmo, PayPal, and the like. The Cash Card then followed in 2017.
The Cash Card is the one product on this list I have some personal experience with. I’ve been using the card for several months now and have become a fan of its Boosts feature. Boosts allow cardholders to instantly earn discounts on select restaurant and retailer purchases. In some cases these discounts are a percentage off (e.g. 10% off at Chick-fil-A) while my personal favorite Boost grants a $1 off at any coffee shop. Thanks to this Boost, I’m able to reload my Starbucks card with $10 and have only $9 be deducted from my Cash card balance.
As a Cash Card user myself, I may be a bit biased, but I find this offering to be the best of the three P2P options on this list. For what it’s worth, Square Cash is also my favorite P2P app to use in general, so perhaps that also plays a factor. In any case, the Boost feature shows that companies can create value for their customers by partnering with other brands (something that will come up again later). Because of this I definitely give Square credit for creating a debit card that’s actually worth using.
Biggest perk: 2.25% APY on savings balance
SoFi is a FinTech startup that seems to do a little bit of everything these days. While the company might be most associated with loans, they’ve recently pushed active and automated investment accounts as well. Elsewhere, they also offer their SoFi Money account and Visa debit card.
Billed as a hybrid account, SoFi Money boasts that it currently pays users a 2.25% APY on their money without charging them any monthly fees. But the lack of fees doesn’t stop there — according to their fee schedule, the card offers free or reimbursed ATM fees worldwide, $0 foreign transaction fees, and no overdraft fees (note: the transaction will just be declined in most cases).
Sure 2.25% might not be the absolute best APY available but it’s also not far off — not to mention that this is actually a hybrid checking account. Plus the ability to use any ATM domestic or abroad is another winner in my book. All this means that, although SoFi may be the most out of left field app on this list to have a debit card, it does make a compelling case for itself. Full disclosure: I actually signed up for a SoFi Money account while writing this, so I mean what I say.
Cost: $3 a month
Biggest perk: Instant Round-Ups
If you’re not familiar with Acorns, the app has made a name for itself with its round-ups concept for micro-investing. The app’s pitch is that users can start investing just by saving up their digital spare change. Following the success of that basic premise, Acorns has since expanded their offerings to include, among other things, a specialty debit card called Acorns Spend.
One of the features that comes with Acorns Spend is instant round-ups. Currently, without the debit card, users need to accrue more than $5 in roundups before funds are transferred to their investment account. The company also says that cardholders will have access to additional “Found Money” offers that allow users to earn cash back from retailers and restaurants that is then deposited into users’ investment funds.
Acorns has only recently started shipping out the first 100,000 of its Spend cards, which they say were all claimed in just four days. Still, they are currently allowing other interested individuals to join a waitlist. These cards come at a cost of $3 a month, although this fee also includes Acorns Core (the app’s flagship investment product) as well as Acorns Later (their retirement savings option).
Ultimately $3 may be a steep price, but this does include three products. The key here actually isn’t the card itself but the Acorns Core and Acorns Later features that come with it. Those who have sizeable balances in each of these accounts might not find that monthly fee to be much to fret over. Meanwhile those who aren’t heavy users of Acorns or don’t plan to build up their accounts to a notable balance any time soon will likely want to pass.
Cost: Card is free but Stash account is $1 a month (or 0.25% annually for investment account balances over $5,000)
Biggest perk: Stock-Back rewards
Next up is another investment app who’s come out swinging in the debit card game. Like Acorns, Stash allows users to start investing with as little as $5. Now they’re also offering customers a new way to build their portfolios by adding a clever perk to their Stash debit cards.
This week, Stash announced Stock-Back for its debit card product. Now users will be able to earn fractional shares of stock in the companies they shop at using their Stash debit cards. In fact the company says cardholders will be able to earn Stock-Back at any store in the United States. Obviously not every shop in the country is publicly traded, so Stash says it will instead issue users a stake in “Stash-approved ETFs” when a corresponding public stock is not available.
According to MarketWatch, the amount of Stock-Back shoppers will earn will depend on the retailer. For example they note that Netflix and Spotify will offer 5% on purchases, while Dunkin’ Donuts and Starbucks purchases will net users 2% back. As for everything else, cardholders will either get 0.125% back by default or 0.25% if users enable a direct deposit to their Stash account.
The concept of Stash Stock-Back is somewhat similar to FinTech app Bumped. However that service allows users to link their existing credit and debit cards in order to earn stock for their purchases. Of course the other major difference between the two is that Bumped currently allows users to choose a total of 14 companies (one from each category) among more than two dozen options instead of opening the field to every store like Stash is.
Overall Stash’s Stock-Back perk will undoubtedly earn some attention. Unfortunately I fear those who may be excited by the premise may be disappointed in the small percentage they’ll actually be earning — unless the company beefs up its participating partner roster as they say they plan to. Still this may be one to watch and hopefully gets many younger adults interested in investing.
Status: On hold
Biggest perk: 3% APY (potentially)
At the end of last year, yet another investment app made a splash announcing their own debit card. Robinhood originally revealed that it was launching a “Checking & Savings” product that would pay users a 3% APY on their funds, give them a swanky looking Mastercard debit card, and wouldn’t charge them many of the fees banking customers have come to know and loathe. It all sounded pretty great until the startup more or less got called out by SIPC and was forced to partially backtrack on their plans.
You can read more about the whole debacle but, long story short, it’s currently unclear when the rebranded Robinhood Cash Management will arrive or what the product will entail. Currently the feature is still listed as “coming soon” on Robinhood’s site and in their app, so stay tuned for if/when it arrives.
In just the past couple of years, several debit card offerings from FinTech ventures have hit the market. Although some of these products merely provide customers with an easier way to spend their peer to peer payment balance, others are employing interesting perks and gimmicks to give users a reason to choose them over rewards credit cards and other options. With these early adopters seemingly catching on, it’s only more likely that additional players and perks will follow. Stay tuned!
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Also published on Medium.