If the banking-as-a-service fintech Unit does its job right, it will be ubiquitous among businesses and simultaneously have a name unknown to the end user. The company gives companies a way to embed financial services into their product — and after already launching debit cards, Unit is officially breaking into the charge card game.
Unit customers can now use the startup’s API to build custom-designed charge cards for their own end users. Customers can offer their customers a charge card, credit card, revolving loan or any other credit products that Unit’s bank partners offer. On the back end, Unit will handle card printing, compliance and, once the card is in use, transaction tracking as well.
According to co-founder and CEO Itai Damti, cards are Unit’s fourth and final pillar as a venture-backed company, adding onto its products in the debit, bank accounts and payments space.
Just six months ago, Unit announced that it raised a $100 million Series C at a $1.2 billion valuation, making its total equity raised since inception to nearly $170 million.
Charge cards, which are more popular than credit cards for small businesses, give Unit a way to enable customers to build and offer lending products, even though the startup is not a lender itself. “Once you can store money for people, you can move money for people and you can give people money, this is the full spectrum of banking that all these software products can use to launch within their environments,” Damti said.
If Unit’s new card line sounds competitive with the likes of Brex and Ramp, valued at billions of dollars — I had the same thought, and it’s a little more complicated. Instead of selling a card to startups like its well-capitalized competitors, Unit is selling customers on a way to create personalized cards for their own end users. It’s going for a classic B2BC model instead of a B2B model.
“If you’re a company that sells to construction companies, instead of your customers finding other solutions in the market, you can just embed [lending] into your software,” Damti said. “We don’t compete with [Brex and Ramp] per se, but we do allow companies to basically offer an equivalent product and do it in a way that is embedded.”
Unit’s expansion sits differently during a particularly tough economic run for fintech companies such as Chime and Stripe, which conducted layoffs over the past few weeks. Unit VP of lending David Sinsky, who recently joined the company after a seven-year stint at Opendoor, explained that the new product could help its customers introduce an entire new line of revenue through interchange fees.
“There’s maybe less VC money to spend on Google and Facebook ads, but we’re working with companies that have built differentiated software,” Sinsky said. “And I see Unit [as an] opportunity to better serve those users and improve their unit economics.” Unit claims that a card swipe transaction will yield 0.5% more interchange revenue when done with a credit card compared to a debit card.
Damti added that there’s “less of a red ocean in vertical finance … there’s a tremendous opportunity, because they have data, they have a distribution and they can be very effective underwriters who are very effective lenders in their vertical.”