Robinhood to Acquire “Smart Credit Card” Company X1
Two major FinTechs are coming together as the stock trading app Robinhood has announced plans to purchase credit card startup X1.
About the deal:
In a press release, Robinhood revealed that it intends to acquire X1 for an estimated total of $95 million. The transaction will be all cash and is expected to close in the third quarter of this year. As part of the deal, X1 team members will be joining Robinhood, including co-founders Deepak Rao and Siddharth Batra. Moreover, Rao will become GM of Credit Cards for Robinhood, reporting to Robinhood CEO and co-founder Vlad Tenev.
X1 bills itself as “the smartest credit card ever made.” Officially launched in 2022, one of the stated selling points is the potential for higher credit limits since the company’s algorithm takes both current and future income into account. The card also boasts a sleek metal design and carries no annual fee.
As for rewards, cardholders can earn a base rate of 2x points on all purchases. However, those who spend at least $1,000 on the card per month can earn 3x points instead — up to a total of $7,500 per month in spending. Additionally, cardholders can earn boosts to their point accrual (earn 4x, 5x, or even 10x) by successfully referring friends to the card. These points can then be redeemed for purchases from select brands or for cashback, although redemption rates may vary.
More recently, the company opened the waitlist for a new product called X1+. This take on the card would focus more on travel by including additional perks as well as earning 4x points on Expedia, Hotels.com, and VRBO purchases. Unlike the regular X1 card, though, the X1+ would carry an annual fee of $75. While this new card was expected to arrive this summer, it’s unclear whether this acquisition will have an impact on its rollout.
What they’re saying:
In a blog post announcing the news, Robinhood wrote that “Providing people with access to a no-fee credit card aligns with our mission to democratize finance for all.” Additionally, Tenev stated, This acquisition will bring us closer towards our goal of serving the entirety of our customers’ critical financial needs. Together with X1, Robinhood will now be able to offer our customers access to credit.”
On the other end of the transaction, Rao said of the deal with Robinhood, “When founding X1, we set out to create a different kind of credit card with an unparalleled experience for customers, similar to Robinhood’s mission to make our financial markets more accessible to all. We share the same ethos and joining together with Robinhood we’ll be able to offer an enhanced credit card experience.”
In many ways (and for reasons that both companies have stated), the merging of Robinhood and X1 makes a lot of sense. As a matter of fact, when looking on X1’s site, I noticed a section for buying stocks with points — with the image featured even resembling Robinhood’s interface. To me, those are the types of integrations that could work quite well.
Of course, being the nerd that I am, I do wonder how this proposed acquisition could affect some already-announced projects — namely X1+. Considering that Robinhood specifically calls out the “no-fee” aspect of X1 as a reason why the companies align, it might be a bit strange to launch an annual fee product just before the merger. Then again, as long as the no-fee option exists, I don’t see this being too much of an issue for Robinhood (aside from the fact that I don’t think the X1+ card itself seems too appealing).
Speaking as someone who is still an overall fan of Robinhood despite its many controversies and missteps over the years, I’m honestly excited to see what X1 looks like in their hands. Now I just fear that I’ll have to end up getting this card to review…