{"id":11602,"date":"2025-03-12T16:38:18","date_gmt":"2025-03-12T16:38:18","guid":{"rendered":"https:\/\/finderica.com\/?p=11602"},"modified":"2025-03-12T16:38:18","modified_gmt":"2025-03-12T16:38:18","slug":"this-fintech-helps-you-get-more-credit-card-rewards-at-retailers-like-h-e-b","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=11602","title":{"rendered":"This Fintech Helps You Get More Credit Card Rewards At Retailers Like H-E-B"},"content":{"rendered":"\n
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Imprint\u2019s cloud-based ledger system allows retailers to micro-target rewards. Does it have a shot against big branded-card issuers like Synchrony and Capital One?<\/h2>\n

By <\/sub>Jeff Kauflin<\/sub>, Forbes Staff<\/sub><\/h4>\n
\n

H<\/abbr>aving cycled through jobs <\/strong>as a corporate lawyer, financial services consultant at McKinsey and vice president of operations at WeWork, Daragh Murphy was determined to do a fintech startup\u2013something, perhaps, to help credit unions get up to date. But in April 2020, he got a call from Gaurav Ahuja, a venture capitalist at Josh Kushner\u2019s Thrive Capital, with an alternative plan. As Murphy tells it, Ahuja said, \u201cWe hear you\u2019re working on a fintech idea. We don\u2019t love that idea, but we like what we\u2019ve heard about you.\u201d<\/p>\n

As Murphy and Ahuja talked on long, masked walks through pandemic-devastated New York, they both became keen on Ahuja\u2019s idea: a cloud-based credit card platform that would allow brands to customize rewards and micro-target promotions for their best customers to a degree older technology wouldn\u2019t.<\/p>\n

Last week, Imprint, the company they founded with former Thrive employee Michael Pechman, raised $500 million in new debt financing from Japanese bank Mizuho, Charlotte-based Truist and U.K. bank HSBC. That brings Imprint\u2019s total lending capacity to more than $1 billion. The startup was valued at $800 million in a previously undisclosed November 2024 fundraise, according to a person familiar with the deal, and counts Thrive, Kleiner Perkins, Ribbit Capital and Khosla Ventures among its backers. It has raised $300 million in equity funding since its founding five years ago.<\/p>\n

Murphy, 35, is the CEO. Ahuja, who is chairman, reached out to him because he had heard Murphy was the kind of entrepreneur \u201cwho will give every last drop of blood\u201d to make a startup work.<\/p>\n

Not long ago, lending money to consumers looked like a losing business for fintechs, best left to big banks with a lower cost of capital. Investors and CEOs pointed to the underwhelming outcomes of companies like LendingClub and Prosper, dismissing lenders as destined for second-rate market values and investment returns. But over the past five years, with the growth and profitability of now-public businesses such as Nubank and Affirm, opinions have started to shift, paving the way for a new class of fintechs to try their luck as specialty lenders.<\/p>\n

Six lending-focused businesses, including Imprint, made their debut on the 2025 edition of Forbes\u2019<\/em> annual Fintech 50 list. Imprint draws 60% of its revenue from interest payments from consumers who don\u2019t pay their card balances in full each month.<\/p>\n

More than 400,000 consumers have signed up for cards issued by Imprint, and it manages $450 million in outstanding loans. Murphy\u2019s startup brought in $70 million in revenue in 2024, up from $15 million in 2023. No, it\u2019s not profitable yet\u2013it burned about $35 million last year, Murphy says, adding that he still has over $100 million in cash in the bank and expects the operation to turn profitable on a GAAP basis in 2026.<\/p>\n

So far, Imprint has signed up eight brands, including H-E-B, Texas\u2019 largest grocery chain; Turkish Airlines; Brooks Brothers; Eddie Bauer and Holiday Inn Club Vacations. In addition to offering a finer targeting of rewards, Murphy tries to go easier on late fees than his big-bank competitors that also sell co-branded cards, which include Barclays, Synchrony, U.S. Bank and Capital One. He does that by making concessions like forgiving the late fee for cardholders the first time they miss a payment and allowing a five-day grace period for people to pay their bill before getting slapped with the fee.<\/p>\n

\u201cWe compete against these massive banks, so there really isn’t fintech competition for what we’ve been doing. And the banks are just old,\u201d says Murphy, sporting gelled-back hair and speaking from the startup\u2019s sleek New York office that sits a stone\u2019s throw from Wall Street, on the 23rd floor of a high-rise, with views of the Statue of Liberty and the Verrazzano Bridge. Other fintechs like Cardless and Deserve that offer co-branded card services have struggled to sustain their growth.<\/p>\n

\n

D<\/abbr>aragh Murphy<\/strong> was born and went to college in Dublin, Ireland, and came to the U.S. to attend law school at Duke. He got hired as an associate at WilmerHale in New York, where he lasted three years. \u201cI hated it,\u201d he says. Murphy became a McKinsey consultant and left three years later to join WeWork, where he worked on projects like setting the company\u2019s sales and pricing strategies. He departed in September 2019, \u201ca little before it all ended in misery,\u201d as he puts it.<\/p>\n

When Ahuja called with his credit card idea, Murphy got it\u2013as a consultant, he had seen how banks were limited in the types of rewards programs they could offer due to their reliance on inflexible third-party technology. (Over time, Ahuja became less active in Imprint\u2019s operations\u2013today he splits his time between Imprint and investing for his own venture fund, Timeless. Pechman left Imprint in 2023 and is working on a new startup, according to his LinkedIn profile.)<\/p>\n

The technology advantage Imprint touts over older providers is its home-grown transaction ledger system. This lets it make better use of alternative data and establish more granular, item-level connections between a consumers\u2019 purchases and the rewards that accrue on their cards, the startup says.<\/p>\n

That tech is how H-E-B cardholders can get 5% cash back when they buy the grocer\u2019s private label, store-branded products, but just 1.5% when they buy anything else. Imprint has a travel card coming out this year where cardholders will get 4% cash back while they\u2019re on vacation\u2013Imprint\u2019s system will link to consumers\u2019 travel reservations to verify when they\u2019ll be away. Imprint says its software also lets businesses test the effectiveness of different marketing and rewards schemes and that its consumer credit card app is easier to use than those of the incumbents.<\/p>\n

While Imprint\u2019s own technology is new, its customers\u2019 payments systems are often dated, making Imprint\u2019s integrations arduous. \u201cWe send our four deployed engineers to sit with you in Houston and work with you for three months. We\u2019ll be in the shared Slack channel, celebrating birthdays, doing pizza parties and pulling all-nighters together,\u201d Murphy quips. \u201cOur job is to be a technology company, but also almost a services company.\u201d Typically, the larger the customer and the more dated their current technology is, the harder it is to integrate and use all the features of newfangled software.<\/p>\n

Interest rates on Imprint\u2019s cards are similar to those of competitors like Synchrony and Barclays, Murphy says. The cost of its late fees seem to be similar as well, with a $27 charge for your second infraction (the first one is forgiven) and up to $35 after that, according to cardholder agreements for several of its cards.<\/p>\n

Since Imprint isn\u2019t a bank, it partners with Salt Lake City-based First Electronic Bank to originate loans. Imprint shares the revenue it earns on cardholders\u2019 monthly interest payments with First Electronic. (Murphy says about half of Imprint\u2019s cardholders carry a balance and pay monthly interest.) Beyond the 60% of Imprint\u2019s revenue that comes from interest income, the interchange fees merchants pay when consumers swipe their Imprint cards make up another 35%. The last 5% comes primarily from annual-card and late fees.<\/p>\n

Murphy is chasing national and large regional brands as customers, and he\u2019s looking for businesses that consumers have an ongoing relationship with. Grocery store chains, hotel brands, travel services and pet companies are among his targets. Today, H-E-B makes up roughly 35% of Imprint\u2019s revenue, though Murphy expects that to fall below 20% by the end of 2025 as his startup grows. He won\u2019t share his revenue projection for 2025 but says the fast growth will continue. Imprint\u2019s revenue expanded by more than four times last year, and this year, \u201cWe’ll probably be plus or minus a turn on that,\u201d he says.<\/p>\n

This summer, Imprint plans to start letting its customers offer standalone buy-now, pay-later loans alongside their branded credit cards. Imprint cardholders will also be able to transfer a buy-now, pay-later loan to an Imprint card to earn rewards. A year ago, Synchrony also made a move into point-of-sale installment loans when it bought Ally Lending<\/a>, which then managed $2 billion in outstanding loans to businesses ranging from roofing companies to dentists.<\/p>\n

Murphy says Imprint might eventually try to become a bank, which would significantly reduce the cost of capital it incurs in its lending business. To fund its loans, the startup says it pays between 1.5% to 2.5% above the benchmark Secured Overnight Financing Rate (SOFR), which is currently 4.3%, leading to a cost of funds that exceeds 6%. By comparison, Synchrony, a chartered bank that sits atop a base of more than $80 billion in consumer deposits that it can lend from, reported a 4.7% cost of funds in 2024. Synchrony manages more than $100 billion in consumer loans, a book that\u2019s more than 200 times the size of Imprint\u2019s.<\/p>\n

\u201cWe\u2019ve always had this dream that someday we may want to get our own bank license,\u201d Murphy says, adding that the decision will rest on several factors. \u201cIs it even a regulatory possibility? For the last six or seven years, it has not been,\u201d he notes. The other questions: \u201cAre we mature enough to do this? Are we in the right financial position? Do we have the right talent?\u201d<\/p>\n

He faces a tough road ahead. One challenge is that behind each new customer lurks a frightening risk. If Imprint botches its risk assessments and overestimates how many consumers will pay back their loans, it will lose a lot of money. \u201cIn lending, some deals are bad deals,\u201d cofounder Ahuja says. \u201cWe have the right to be picky.\u201d<\/p>\n

Murphy says the default rate for Imprint\u2019s cardholders is hovering around its target of 4% to 4.5%. Its cardholders earn a median income of $85,000 and have average FICO credit scores between 715 and 720. (By comparison, the average default rate for all U.S. credit cards was 4.7% in the fourth quarter of 2024, and the average FICO score was 715 for the full year.)<\/p>\n

Another daunting risk: Lending is capital-intensive, but the supply of capital can be unpredictable. Capital markets can freeze up, making funding scarce and expensive. Fintech lender Upstart has suffered from this setback over the past few years, causing its stock to slump periodically. \u201cWhat we can\u2019t control is the macro environment,\u201d says Imprint investor Mamoon Hamid, a partner at Kleiner Perkins. \u201cThat predicates the terms that make our business great, good or not great.\u201d<\/p>\n

Perhaps the biggest hurdle will be getting over the hump of building a profitable, sustainable business. Imprint\u2019s operating costs are high, though Murphy says revenue is increasing at a much faster rate. The CEO says his startup will become profitable on a generally accepted accounting principles (GAAP) basis in 2026 and that Imprint is \u201cgrowing faster than almost any non-AI company.\u201d<\/p>\n

<\/h4>\n

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