Is This Video Game Too Hard?
The front of Nintendo's first store in Kyoto.
3 FINTECH NEWS STORIES
#1: Automated Account Switching Comes to Commercial Banking Copy anchor linkCopied
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A new fintech infrastructure company raised a seed round:
Onsetto, a Minneapolis-based fintech building a white-label platform to help banks and credit unions capture and retain primary business banking relationships, has raised $2.2 million in a Series Seed financing. The round was led by EJF Ventures, the early-stage fintech investing platform of EJF Capital.
The company’s platform is designed to automate what Onsetto described as a historically manual and fragmented process for business customers moving their primary operating relationships. By identifying core operating account components and guiding transitions across payroll, accounts receivable and payable, and other operating flows, the platform aims to help financial institutions move payments faster, fund new accounts earlier, and surface treasury opportunities sooner in the onboarding lifecycle.
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Onsetto was founded by Cale Johnston, who had previously founded ClickSWITCH in 2014. ClickSWITCH provided a very similar automated account switching service, but for consumer deposit accounts. It was acquired by Q2 in 2021.
And now that automated account switching for consumer deposition accounts has become more of a table-stakes feature (Q2, Mastercard, Pinwheel, Atomic, Argyle, and Truv all offer it, to varying degrees) and the consumer open banking space has become mired in legal and regulatory uncertainty, Johnston is jumping into the commercial banking world.
Smart.
Companies, particularly the larger ones that I’m guessing Onsetto is targeting, don’t move primary banks all that often, but that makes it all the more important to ensure it goes well for the banks trying to close the deal.
It’s like kicking an extra point in football. You simply can’t afford to miss any of them (especially if you’re an underdog playing against a better team).
Capturing a company’s primary operating account is the same. There’s a lot of work that happens after account opening — switching payroll, migrating accounts receivable/payable, updating payments from vendors, moving ACH transfers, re-establishing direct deposits — that is essential. Onsetto provides banks with a platform that uses AI to identify and prioritize the key components of a business’s operating account, automate the switching of payroll and recurring payments, and identify early treasury and deposit cross-sell opportunities.
Onsetto, like ClickSWITCH before it, strikes me more as a feature than a company, which, to be clear, is not an insult. ClickSWITCH claimed to have 450 financial institutions as customers at the time it was acquired by Q2, and Q2 paid $65.5 million for it, according to its SEC filing. A similar exit for Onsetto (perhaps to a company like Ramp?) would be a very satisfactory outcome for all involved.
I’m excited to see where they go.
#2: Is This Video Game Too Hard?Copy anchor linkCopied
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Bilt introduced its new lineup of “Bilt 2.0” credit cards:
Bilt is launching an entirely new card lineup in early 2026, replacing the existing Wells Fargo–issued Bilt Mastercard with a new family of cards, a new issuing bank (Cardless), and a reworked rewards structure built around something called Bilt Cash.
This is a big change, especially for longtime cardholders who are used to earning points on rent without fees. The new system is more flexible, more complex, and in some ways more powerful, but it also requires a clearer understanding of how the pieces fit together. Some will find it a downgrade.
Then it relaunched its relaunch a few days later. Here’s Ankur Jain, Bilt’s CEO:
Over the past few days, I’ve spent a lot of time reading our members' emails, DMs, and notes. Many were thoughtful and passionate. Some were frustrated. All were fair.
I feel incredibly lucky to lead a company with members who care this deeply.
On one hand, there have been record applications for the cards, and I’m excited for members to get them. However, I’ve also seen real and reasonable confusion about the new value proposition—especially around rent and mortgage points. That’s on me, and we’re fixing it.
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I’m not a credit card points optimizer. I respect the hustle, but it’s just not how I want to spend my extremely limited time. So, I’m coming at this story from the perspective of an interested outsider, and I apologize in advance to any credit card supernerds who read this and get annoyed by my oversimplified explanation and analysis.
The old Bilt Card, issued by Wells Fargo, was both simple and lucrative for users. It allowed cardholders to pay their rent with the card (fee-free) and collect 1x points on rent (up to 100,000 points/year). Cardholders also got 3x dining, 2x travel, 1x everything else, which doubled on the first day of the month (rent day). The card didn’t have an annual fee, and it only required cardholders to use it at least 5 times per billing cycle to unlock the full rewards.
As the Wall Street Journal reported and I wrote about multiple times, Wells Fargo (which is also an investor in Bilt) got absolutely SLAUGHTERED on the Bilt Card, to the tune of tens of millions of dollars a month. If you were to look at the data, my guess is that a large percentage of Bilt Card 1.0 users were using the card exactly 5 times per billing cycle and then paying their rent and racking up the rewards points. That was obviously unsustainable, and, according to the Wall Street Journal, Wells Fargo essentially forced Bilt to find itself a new issuing partner.
The new cards, issued by Column Bank through a partnership with Cardless, represent a fairly significant course correction. Instead of one card with no annual fee, Bilt now offers three different cards:
- Bilt Blue: $0 annual fee, 1x points + 4% back in Bilt Cash on everyday purchases, potential unlimited 1x points on rent and mortgage payments.
- Bilt Obsidian: $95 annual fee, 3x points on your choice of dining or grocery (capped at $25K per year), 1x points on all other purchases + 4% back in Bilt Cash on all purchases, potential unlimited 1x points on rent and mortgage payments.
- Bilt Palladium: $495 annual fee, 2x points and 4% back in Bilt Cash on everyday purchases, potential unlimited 1x points on rent and mortgage payments.
The annual fee cards have a few other bells and whistles (welcome bonuses, travel credits, etc.), but this is the basic pitch, and it’s not bad. Limiting the non-housing category rewards to the annual fee tiers is annoying but not unreasonable.
The unreasonable part comes in when you try to get those sweet unlimited 1x points on rent/mortgage payments. Under the company’s originally proposed rewards structure for Bilt 2.0, the only way to unlock the ability to earn Bilt points for housing spend is to earn Bilt Cash on non-housing spend. The idea, as I’m sure you can guess, is to incentivize you to use the card for more everyday spend, as this article explains:
The basic idea: you earn 4% back in Bilt Cash on everyday spending, and that Bilt Cash can be used to offset what is effectively a 3% fee to earn points on rent or a mortgage. In practice, that means you need to spend roughly 75% of your rent or mortgage amount on the card each billing cycle in order to fully cover the cost and come out ahead.
A second rewards currency, designed to make it more difficult to earn the company’s primary rewards currency. Even for premium credit cards, that’s complex.
Too complex, it turns out.
A couple of days after announcing this new product/rewards structure, Bilt attempted to simplify it:
Under the revised approach, Bilt Card 2.0 cardholders can choose between two options for earning points on rent and mortgage payments:
- Option 1: A simple, fee-free way to earn points on housing payments. You pay your full rent or mortgage each month with no transaction fee and earn points automatically based on how much everyday spend you put on the card, starting at 0.5 points per dollar. The more you spend on everyday purchases, the higher your points multiplier, up to 1.25X.
- Option 2: The original Bilt Card 2.0 structure remains available. You earn 4% back in Bilt Cash on everyday purchases and then use that Bilt Cash to unlock points on rent or mortgage payments.
The basic math is the same, either way. Spending roughly 75% of your monthly housing expense on non-housing expenses with the card gets you 1x points on your housing spend.
Now, there’s just an easy way to do it and a hard way to do it, and, confusingly, users can switch between the two systems as frequently as every month, if they want to.
Zooming out, the fundamental challenge in the premium credit card space these days is that consumers have gotten too good at optimizing credit card rewards. There’s too much consumer education and too many optimization tools (and we haven’t really seen what LLMs are going to do in this space yet). This has put pressure on the issuers’ business model; there aren’t enough bad players playing the video game to pay for the rewards for the really good players.
For the most successful premium card issuers like JPMorgan Chase and American Express, this isn’t a huge deal. They can just raise the costs of playing by increasing the annual fees (Chase Sapphire Reserve’s annual fee jumped from $550 to $795, and AmEx Platinum went from $695 to $895) to screen out the less serious good players (you have to be really committed to points optimization to spend $800+ on annual fees) and trust that they will have enough bad, price-insensitive players to make the math work.
These guys have the scale and marketing muscle to do this, despite tighter margins caused by more optimized usage. Indeed, according to the CFPB, they have managed to offset optimization pressure by extracting more revenue from a smaller, higher-paying cohort:
Between 2022 and 2024 the percentage of consumers who paid an annual fee declined, but the average annual fee rose. This resulted in an increase in total annual fees charged to the highest level in our data at $8.7 billion in 2024.
But what do you do if you’re not at this JPMC/AmEx level?
Well, you try to attract the more price-sensitive good players to play in your game (Citi’s new premium card has a $595 annual fee, Capital One’s is $395), and you make the game more complex and difficult to win (this, I think, is the impulse behind Bilt Cash).
Honestly, I find the backlash to Bilt’s original 2.0 rewards structure to be a reason for optimism. As JC Bahr-de Stefano observed on Twitter, people seem increasingly burned out on points optimization. I wouldn’t mind if the industry started steering itself in a simpler direction. Consumer finance shouldn’t be designed like a video game (or a slot machine).
#3: Skate to Where the Puck is Going to BeCopy anchor linkCopied
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The White House is trying to find ways make President Trump’s call to cap credit card interest rates at 10% happen:
The White House is weighing an executive action to enact President Donald Trump’s call for a cap on credit card interest rates, in addition to other measures seeking to ease US affordability challenges.
The plan, which is still being crafted as administration officials discuss the terms with industry and Congress, is designed to lower interest rates on credit cards as part of a broader push to reduce costs for Americans, according to people familiar with the matter.
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That famous Wayne Gretzky quote — “I skate to where the puck is going to be, not where it has been” — sounds awesome. However, if your erratic and egomaniacal teammate keeps “passing” the puck way out in front of you, all that’s going to happen is you skating really fast, only to turn the puck over and smash into the boards.
This seems to be what’s happening after the President’s shoot-from-the-hip call to cap credit card interest rates at 10% by January 20th.
Ideas for how to make the rate cap happen include blind subservience:
"The president certainly has an expectation ... that the credit card companies will do this," White House spokeswoman Karoline Leavitt told reporters on Thursday. "I don't have a specific consequence to outline for you, but certainly this is an expectation, and frankly, a demand that the president has made."
Trump’s action may also call on regulators to relax certain liquidity standards to help make the plan more attractive for the banks, said the people, who asked not to be identified citing private discussions.
And legally-dubious maneuvers:
One option expected to be under consideration has been to invoke the interstate commerce clause as a way to override state usury limits, according to a lobbyist involved in industry discussions around responding to a possible executive order.
It’s so incredibly dumb that I even have to write about this news, but whatever, [slams head into desk multiple times] here we go:
- Pretty much nobody wants this. The big credit card issuers obviously hate it, as do merchants (for all their complaining about interchange fees, large retailers are ridiculously dependent on credit cards). Consumers who transact with credit cards and never revolve a balance don’t want anything to disrupt the game that they are winning. Consumers who revolve a balance and pay interest probably shouldn’t be doing so, but they either don’t have a choice or they do, and they have chosen to revolve a balance. They may, at times, complain about excessive interest payments, but they would complain A LOT more if they suddenly didn’t have access to credit cards and had to turn to more predatory alternatives. Consumer advocates have even been acknowledging this reality in their public comments (some have been pushing for the idea of a rate cap, but at a higher rate). Most of Congress understands the dire economic consequences of dramatically reducing American consumers’ access to credit. Shit, if the President actually groked what he was proposing here, he would be against it too!
- This should go without saying, but I’ll just say it anyway: The President cannot unilaterally cap credit card interest rates through executive action. It would require Congress to pass a new law, which has a near 0% chance of happening. If the President were to try the executive action route, it would face immediate and forceful legal challenge, and I can’t imagine the courts (even the ones we have now) siding with the Administration.
- This should also go without saying, but I’ll say it anyway: It would be an incredibly bad idea to trade regulatory relief on liquidity or capital requirements to the big banks in exchange for even their partial support of this dumb proposal. The heads of the bank regulatory agencies should throw their bodies in front of that idea.
- This is one of those moments when the irony of allowing Russ Vought to play out his government bureaucracy revenge fantasy comes into sharp focus. If the Trump Administration had a fully armed and operational CFPB, it could much more effectively pressure the big credit card issuers. The CFPB is legally barred from imposing usury limits (i.e., capping interest rates), but, under the Biden Administration, it tried to do lots of other stuff that issuers hated, and that could have been spun by this Administration as being pro-affordability (capping credit card late fees, anyone?!?)
I saw someone on Twitter suggest giving the President a Greenland coloring book that says, “The Biggest Peace Prize Ever for Peace-Loving Geniuses,” and hoping that it would be enough to get him to let this insane obsession with Greenland go.
Perhaps something similar could work here?
OK, yep. White House economic advisor Kevin Hassett is already on it:
Our expectation is that it won’t necessarily require legislation, because there will be really great new ‘Trump cards’ presented for folks that are voluntarily provided by the banks.
[Slams head into desk many more times.]
2 READING RECOMMENDATIONS
#1: Trump Cards (by Marc Rubinstein, Net Interest) 📚Copy anchor linkCopied
If you’re looking for more analysis on Trump Cards (Aaack … that was difficult to type), Marc has you covered!
#2: Writing Checks We Can’t Cash (by Kiah Haslett, Fintech Takes Banking) 📚Copy anchor linkCopied
In 2021, consumers and businesses sent 11.1 billion checks, totaling $27.44 trillion, according to the Federal Reserve Payment Study.
That’s lunacy. And it’s unlikely to abate anytime soon.
Kiah Haslett, chronicler of obscure-but-important bank stories, has more …
1 QUESTION FROM THE FINTECH TAKES NETWORK
There are a TON of interesting questions being asked in the Fintech Takes Network. I’ll share one question, sourced from the Network, each week. However, if you’d like to join the conversation, please apply to join the Fintech Takes Network.
Klarna has an increasingly bifurcated business model, where the U.S. generates a majority of gross merchandise volume and revenue, but Europe provides much of the funding for the company’s BNPL loans through its banking products (deposit accounts, debit cards, P2P payments, open banking, etc.)
Will this model persist? Or will the company attempt to compete more directly on the banking side here in the U.S.?
Also, will a Klarna stablecoin alter this dynamic at all?
If you have any thoughts on this question, reply to this email or DM me in the Fintech Takes Network!
Thanks for the read! Let me know what you thought by replying back to this email.
— Alex
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