Credit card company Imprint surpasses major banks for Rakuten partnership deal

There are newcomers poised to shake up an industry generally controlled by large banks.

Imprint, a credit card startup that launched five years ago, has outbid established banks to secure a deal for new co-branded cards with the online shopping platform Rakuten, as reported by CNBC.

This partnership signals that Imprint is making strides in the competitive co-branded credit card sector.

The New York-based startup recently secured $70 million in funding, pushing its valuation to nearly $900 million within the last year, an increase of 50%, according to CEO Dara Murphy.

Collaborations between credit card companies and brands like retailers, airlines, and hotels are highly competitive. Typically, companies endure a rigorous bidding process to choose a card provider who will issue cards to a loyal customer base. Among the industry’s giants are JPMorgan Chase, Capital One, and Citigroup.

“We are in discussions with Fortune 500 companies about why they choose us over Synchrony, Barclays, and US Bank,” Murphy noted in an interview. “We maintain a startup ethos, yet we must also operate like a significant, respected player.”

With this latest capital infusion, the total funding for Imprint has reached $330 million, which Murphy believes will enhance their credibility among prospective partners.

Furthermore, Imprint holds a credit line of about $1.5 billion provided by banks like Citigroup, Truist, and Mizuho, which allows them to offer credit to cardholders. The startup has partnerships with brands such as Eddie Bauer, Brooks Brothers, and Turkish Airlines.

In order to issue credit cards, Imprint commonly partners with smaller banks like First Electronic Bank or First Bank and Trust. While they manage customer experiences, technology, and credit evaluations themselves, they use the infrastructure of the regulated banks.

For the Lacten cards, Imprint collaborates with American Express, enabling users to enjoy AMEX purchase protection along with various perks. They also utilize First Electronic Bank for card issuance.

“We aren’t a regulated bank, but we effectively build banking processes,” Murphy explained. “We have to adhere to the same requirements as banks, including compliance, capital markets, and risk management. Plus, we’re a technology-driven company.”

To capture market share for co-branded cards accepted wherever credit cards are, Imprint is prioritizing a smooth digital experience for customers. However, achieving this setup can be complex for larger organizations that depend on third-party services, Murphy noted.

Imprint has also decided to differentiate itself by simplifying the loan repayment process for clients. Murphy highlighted that competing card companies like Bread Finance and Sync earn a higher share of revenue from late fees compared to Imprint.

“There shouldn’t be excessive late fees, nor should payment be cumbersome,” Murphy emphasized. “The simpler it is to pay, the more likely people are to use their cards, and that benefits everyone.”

Moreover, the lower customer acquisition costs at Imprint enable more generous rewards for card users.

For instance, the new Rakuten card offers an additional 4% cashback to users on top of rewards earned through the shopping platform, which can total up to $7,000 annually.

Users can also earn 10% cashback at participating restaurants and 2% cashback at grocery stores and non-partner eateries.

Previous Rakuten credit cards were managed by Sync, which is no longer in use as of 2022.