Cardless Raises $40M to Expand Custom Credit Card Solutions

Credit Card Rewards Evolve with Cardless’ New Funding

A significant number of consumers leverage credit cards to accumulate rewards, often directed towards travel expenses.

However, imagine a scenario where utilizing your credit card could unlock a direct, virtual interaction with a player from your preferred sports team. San Francisco-based Cardless is working to make this possibility a reality.

Series B Funding and Company Growth

The startup, focused on enabling brands and technology companies to introduce customized co-branded credit cards, has secured $40 million in a Series B funding round. Activant Capital spearheaded this investment.

Additional investors include the ownership and management teams of the Phoenix Suns and Boston Celtics, alongside existing investors like Accomplice and Pear VC. This latest financing elevates the company’s total funding to $50 million since its founding in 2019.

Last June, Accomplice and Greycroft jointly led a $7 million Series A funding round.

Simplifying Co-Branded Card Programs

Cardless strives to facilitate the rapid and straightforward launch of credit cards for consumer brands.

The company manages all aspects of program creation, including card underwriting, lending, issuance, and customer service. This quarter saw the launch of three digital programs – collaborations with the NBA’s Cleveland Cavaliers, the British soccer club Manchester United, and the Miami Marlins, a Major League Baseball franchise.

Modernizing the Credit Card Landscape

The company aims to revolutionize the traditional co-branded credit card program model.

According to Cardless co-founder and president Michael Spelfogel, only one of the approximately 200 existing programs in the U.S. originates from a company less than two decades old.

“Many existing cards are tied to established businesses like Costco and Sam’s Club,” Spelfogel explained to TechCrunch. “Our goal is to connect consumers with the brands they cherish and strengthen their engagement with those brands.”

Targeted Rewards and Unique Experiences

Cardless’ rewards programs are specifically designed for demographics that genuinely value the benefits offered by a particular brand.

Spelfogel added that initial programs provided fans with exclusive opportunities, such as player autographs and access to unique experiences.

The company anticipates announcing several new programs throughout the year, boasting a launch timeframe of weeks—a significant improvement over the months or even years required by traditional issuers.

Digital Innovation in Card Programs

These reward programs incorporate digital applications and numberless, virtual cards.

A Large Market Ripe for Disruption

Cardless is targeting a substantial market. Consumer credit cards generated an estimated $150 billion in revenue for traditional banks in 2019, with startups capturing only a small portion of this value.

The company intends to help brands and tech companies secure a larger share of this expansive market by partnering with a bank issuer to provide streamlined card issuance and customized digital credit programs.

Looking Ahead

“This funding signifies the ongoing shift towards digital-focused card issuing,” stated Cardless CEO Scott Kazmierowicz.

Beyond Sports: Broadening the Scope

Cardless is not limited to collaborations with sports organizations.

“We are dedicated to supporting the most engaged customers of leading brands across diverse industries,” Spelfogel emphasized. “Cardless prioritizes the customer experience by eliminating fees and offering responsible products with transparent terms.”

Activant’s Andrew Steele highlighted Cardless’ ability to deliver and implement “distinctive” credit card programs for “prestigious and innovative brands” within just two years of its inception.

“Many brands have faced limitations in launching innovative credit card programs due to the constraints of existing providers,” he noted. “It’s evident that Cardless has the potential to transform and expand one of the largest markets in digital payments, and we are still in the early stages of realizing its full potential.”