Programming NoteHappy Holidays, everyone! We're publishing this week a day early, ahead of the holiday. CardsFTW will be off next week. We look forward to seeing you on Wednesday, January 7, 2026! Everyone Wants to be a Bank (Again)In 2005, I attended some fintech/payments conference in Miami. I can’t recall what it was. I do recall sitting at a table at lunch with Green Dot co-founder Steve Streit and a regulator discussing Green Dot’s plans to eventually buy a bank. That dream came true in 2011, when Green Dot purchased Bonneville Bancorp. During the time I was at Green Dot, Walmart had applied for an Industrial Loan Company charter in Utah (2005). At the time, Walmart was viewed as the evil corporate empire of the time. They did not obtain their charter, withdrawing their application in 2007. Square (Block) formed a de novo ILC in 2020. Lending Club, a fintech lender, closed its acquisition of Radius Bank in 2021. Varo started as a non-bank fintech providing card account services in 2015 and started the process to form a bank in 2017. Varo’s bank was opened in 2020. Jiko acquired Mid-Central National Bank in September 2020. Nelnet (an education finance provider) launched an ILC in 2020. SoFi acquired Golden Pacific Bank in 2021. Brian Barnes, Founder of M1 Finance, took a different path, personally acquiring a bank in 2021 (First National Bank of Buhl, now B2 Bank) with a goal of integrating B2 with M1. That gives me seven acquisitions of banks by fintechs in the past 12 years (if you include Brian’s purchase). Well, 2025 and 2026 look like they will be banner years for this trend. First, a number of crypto and stablecoin companies, such as Circle, Ripple, and Paxos, have received approval to open national trust banks. In addition, both PayPal and Mercury have filed to open banks (an ILC for PayPal and a national bank for Mercury). I get the appeal: working with a partner bank can be a challenge. They are risk-averse, regulated entities. You have to ask them for permission to do just about anything (marketing, product changes, etc.). You have to pay them quite a bit. So you think, why not buy a bank? It will make life easier. We can be vertically integrated! Maybe. (It’s gone quite poorly for Varo, although that might be more about Varo than it is about buying a bank.) Being a bank is often bad for your stock valuation. Banks are often valued somewhere between 0.8 to 1.2x their book value (regulated capital base) with well-run best-in-class banks like JP Morgan Chase trading up to 2x book value and 10x earnings. Fintech companies, on the other hand, can trade at 25x earnings in growth mode and 10x in a more mature spot. Some bank-owning fintech companies like SoFi have kept their stock up, but it isn’t a clear winner. (Not investment advice, I’m sure I got something wrong here.)  some things don't work as planned I don’t think becoming a bank makes your life that much easier as a fintech. Sure, you don’t have to argue with your partner bank, but now you have to argue with your internal legal and compliance function. I guess that’s better? I think these companies should be careful what they wish for. Merchants Don’t Like the Settlement OfferI wrote about the latest swipe fee settlement offer in CardsFTW #180: Do Not Honor All Cards. Merchant groups, including the National Association of Convenience Stores and the National Retail Federation, have filed complaints about the proposed settlement, arguing they are simply not meaningful. As the complaint states: The proposed settlement would reduce the ‘average Effective Interchange Rate’ by ten basis points, a trifling increase from the seven-basis point reduction Judge Brodie rejected last year. In fact, it’s a step backward because average interchange rates increased by nine basis points between 2024 and 2025. The proposed settlement would thus leave rates approximately where they were in 2023, nearly two decades after this litigation began, and at a higher rate than the 2024 proposed settlement.
Looks like this will continue to drag on. I’ll keep you posted. The Challenges of the Discover NetworkI want to start by saying that I am a Discover fan: It was the first credit card I ever opened. Discover has served me well, and the Discover Network business has undertaken innovative projects over the years (e.g., pay by PayPal at Home Depot back in 2012).  Discover Club I have a Capital One checking account and received my new Discover card this past week. The mailer included this fun buckslip that warned me about acceptance. That’s rough. Me, ElsewhereCambrian Fintech PodcastMy first of two interviews with Rex on the Cambrian Fintech Podcast was released last week.
Wow, what a big gold card. CardRatesI was quoted in CardRates about our old pal, the K-shaped economy. CardsFTWCardsFTW, released weekly on Wednesdays, offers insights and analysis on new credit and debit card industry products for consumers and providers. CardsFTW is authored and published by Matthew Goldman and the team at Totavi, a boutique consulting firm specializing in fintech product management & marketing. We bring real operational experience that varies from the earliest days of a startup to high-growth phases and public company leadership. Visit www.totavi.com to learn more. Interested in reaching our audience? You can sponsor CardsFTW.
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