The benefits of Credit with
the peace of mind of Debit
Liran Amrany | [email protected]
Liran Amrany
 9 yrs. derivative structuring @ JPMorgan
 2015 Fellow, Startup Leadership Program
Co-founder & CEO  Masters in Fin Engineering @ UC Berkeley
(valedictorian)
Jeff Hu
 Co-founder & CTO @ Postalgia
 Product Development @ CVS Health
Co-founder & CTO  Yale MBA (Entrepreneurial Fellowship),
Duke Biomedical Engineering
Paul Sauer
Lead Engineer
 M.S. Computer Engineering @ UCF
 Vision Engineering Solutions
 Lockheed Martin
Americans struggle to use credit cards responsibly
$115 Billion
38%
3rd
interest and late fees
in credit card debt
leading cause of
bankruptcy
Many are switching to debit
↑200%
Debit
↑67%
Credit
Why does more of your
spending now go to
debit instead of credit?
89%
9Y Growth
I’m trying to be more
financially responsible
Source: Oliver Wyman “Consumer Payment Preferences: Debit Spotlight”; Federal Reserve
But is debit the answer?
↓54%
Durbin
Amendment
Restricted issuers’
interchange revenue
No rewards on
debit cards
Using debit does not help you build credit
8% Unscorable
11% Credit Invisible
56% Subprime
So should consumers pay with debit or credit?
VS
Does not build credit
No rewards
Less security
Harder to control spending
Interest & late fees
Big bill each month
Monthly auto-pay is not sufficient
Debitize automatically transfers funds to a
Reserve Account after each credit card purchase
$ Daily
Checking
$ Monthly
Reserve
Issuer
& pays the user’s credit card bill
Users get the best of Credit + Debit
Card Benefits
Peace of Mind
Frictionless
Using Debitize
Build credit even faster
Debitize “Credit Optimizer” automatically
targets your Amounts Owed
Featured In:
Competitive Landscape
(patent pending)
Improve credit
PFM
Rewards
Bill pay
Frictionless
Use Cases
Millennial debit
card users
24M
Students / First-time
credit card users
6M
Paying off credit
card debt
11M
Subprime households
49M
Use Cases: Millennial debit card users
Thin credit history
Build credit
Wary of credit
Earn rewards
Confidence to use credit responsibly
Use Cases: First-time credit card users
Never used credit
before
Avoid overspending
Stay out of debt
“Training wheels” for credit cards
Use Cases: Paying off credit card debt
Hard to follow debt
repayment plan
Automate debt payments
Less debt
Better credit
Use Cases: Subprime Households
High interest or do
not qualify for loans
Better credit
Lower interest rates
Target top 2 components of FICO
We want to partner with you
Together, we can help Americans:
Build credit
Stay out
of debt
Contact us to discuss pilot programs or other partnership opportunities:
[email protected] 510-798-6092
The benefits of credit with
the peace of mind of debit
Thank You
[email protected]
The benefits of credit with
the peace of mind of debit
APPENDIX
How it works
1. Sign up and link accounts
2. Use credit card normally
3. Funds automatically
transferred to cover purchase
4. Bill paid with funds from
user’s Debitize account
$ Daily
$ Monthly
Sample transactions
Issuers benefit by converting debit users to credit
Up to $10.9bn increase
in annual interchange revenue
Ave. debit interchange: 0.59%
$5.4bn
Interchange fees
22bn transactions
$910bn annual spend
Ave. credit interchange: 1.79%
$15.3bn
Interchange fees
The Durbin Amendment
(enacted as part of the 2010 Dodd-Frank Financial Reform)
Cap on Debit Interchange
• Banks with >$10bn assets lose ~50% interchange revenue on debit
• Big banks incentivized to get consumers to switch to credit
Anti-Circumvention
• Cap applies anytime funds automatically pulled within 14 days
• Banks reluctant to offer a competing product
Network Routing
• Debit cards must offer at least 2 non-related network affiliations for processing
• Visa/MC at risk of losing debit volume, also prefer credit
Anatomy of a Credit Card Transaction
CONSUMER
Purchase Price
5
Authorization
Request
2
1
Purchase Price
less Interchange Fee
and Merchant
Discount
MERCHANT
4
Authorization Request
CARD ISSUER
Purchase Price
less Interchange Fee
3
MERCHANT
ACQUIRER
(Visa and Mastercard govern the relationship between the Card Issuer and the Merchant Acquirer)
People who switch to credit do so for rewards
Why does more of your spending now go to credit instead of debit?
Credit card has richer
rewards than my debit card
44%
20%
Borrowing on credit
No longer get rewards on my
debit card
18%
14%
Bank incentives to use credit
13%
Other
Credit limit increased
Recently got my first credit
card
0%
7%
5%
20%
40%
60%
Source: Oliver Wyman “Consumer Payment Preferences: Debit Spotlight”