Sunbit launches no-fee credit card

Westwood-based fintech company Sunbit is entering the payment card industry with the launch of its own no-fee credit card, which will primarily compete with buy-now-pay-later firms such as Klarna, Affirm and Sezzle.

In addition to standard credit card features, the Sunbit Card offers a customized APR for approved users and allows them to pay individual transactions in full or in three-, six-, or 12-month payment plans. There are no annual fees, application fees, late fees or penalty fees — nor are there any fees to add or remove a transaction from a payment plan at any time. The card is managed through the MySunbit company app.

Walsh

“I think what we’re trying to achieve is to have the best of all these different (payment solutions) together in one card with no fees and a mobile app that does all the hard work for you,” Bill Walsh, chief customer of Sunbit officer said. The card is issued by TAB Bank, based in Utah, under license from VISA.

So far, Sunbit Card has more than 65,000 early access cardholders and has 400,000 additional users on its invite list.

Expansion

Sunbit also has a point-of-sale option at around 14,000 locations across the country, which includes businesses such as car dealerships, optical practices, dental surgeries, veterinary clinics and specialist health services.

However, the company has a lot of room to work, according to CEO Arad Levertov, who said Sunbit’s goal is to expand acceptance of its card. According to a report by financial analysis website pymnts.com, the United States business market consists of nearly 29 million small and medium-sized traders in 2020.

“There is a large merchant base, and Sunbit has a small market share,” said Dave Maddox, a payments industry consultant with independent payments consulting firm Thinkpayments and a retired business development leader at IBM. “They’re targeting the mortgage market, which is undoubtedly an underserved market.”

Maddox added that buy-now-pay-later (BNPL) services and companies gained significant traction during the pandemic, when high-risk card users were most likely out of work and unable to qualify for a credit card. . Since then, BNPL’s transaction volumes have declined, with companies such as Affirm losing more than 75% of their value as of this February. Affirm’s stock is trading at about $35 today, a far cry from late last year, when its stock was trading at more than $160 a share.

“(Sunbit’s) targeting seems good to me, at least in the fact that they’re focused on individual segments where mortgage consumers would be in trouble and need to finance something,” Maddox said, using auto dealerships as an example of a place where consumers could run into unexpected financial problems that can be helped by Sunbit’s offerings.

Levertov

Filling in the gaps

The Sunbit Card took more than two years to develop, according to Walsh, who said the company spent a significant amount of time researching what gaps in personal finance its card could fill.

One problem found in Sunbit’s research is that more than half of the customers in the study had multiple checking accounts used to process different purchases.

“I think when we started seeing these common themes with personal finance hacks that customers were doing to make everything work, it inspired us to go down this path and feel like we were on to something,” said Walsh.

However, Walsh added, Sunbit faces a big challenge if it wants to expand its card user base: rethinking how a card works in an industry where there is a card-based legacy technology that users are familiar with.

“They need to get user demand, educate users and make sure people are comfortable with the app,” Maddox said. “And they’re competing against PayPal, they’re competing against some (firms) that have real name recognition, like Klarna.”

Convincing consumers is just one piece of a bigger puzzle, according to Maddox. He said successfully pushing the merchant product ahead of competitors will be a challenge, as merchants are likely to stick with one financial solution rather than juggling multiple platforms from different companies.

How Sunbit structures its merchant agreements, which are extensive and detailed documents, will also be a determining factor in how successful the company is in convincing merchants to adopt its services, according to Maddox.

Maddox said that if he were to invest in the company, he would want to better understand Sunbit’s projected loan losses, current loan losses and how it plans to bring more traders on board. “They’re going after the high-risk credit card market, which makes it even more challenging to understand what (their) potential loan losses could be,” Maddox said.

Levertov said Sunbit’s advantage is that it has collected a lot of data over the past six years of operation. “There’s always a challenge when you provide credit, but we’re confident in our ability to measure it and overcome it because that’s what we’ve been doing for years,” Levertov said.

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