- The San Francisco-based company is the first to offer a cryptocurrency rewards feature for business customers
- The decision to allow points redemptions in cryptocurrency was driven by customer inquiries and requests
Brex, the start-up that provides credit cards for start-ups, now lets cardholders redeem points for bitcoin and ether.
While digital bank SoFi recently launched a similar offering for consumers, and crypto services companies Gemini and BlockFi are preparing to launch crypto-back rewards credit cards this year, The San Francisco-based Brex is the first to offer a cryptocurrency rewards feature for business customers.
“This is just the beginning for us,” said Sam Blond, Brex’s Chief Sales Officer. “We are bullish on this crypto space as a company and leadership team. Rewards are our first foray, but we will soon offer additional ways for customers to transact crypto more broadly on Brex.”
Requests on the rise
The decision to allow points redemptions in cryptocurrency was driven by customer inquiries and requests, which have increased steadily since about last summer, following the rising price of bitcoin, Blond said. He also noted Brex’s customers are highly concentrated within tech and e-commerce, and naturally have a higher propensity to be interested in something like cryptocurrency.
Brex was founded in 2016 and serves early stage start-ups, which tend to have difficulty getting corporate credit cards because of their lack of revenue — similar to how consumers tend to have trouble being approved for credit cards before they’ve established any credit. The issue often forces founders to use personal credit cards to fund their businesses. Brex extends them a line of credit based on their corporate bank account balances.
The company launched its rewards program in 2018, allowing cardholders to earn points for spending on ride-sharing, software, travel and dining, as well as offers from partners like AWS, Slack and Gusto.
“There’s a lot of consumer interest in adoption within crypto but less so on the business side,” Blond said. “We believe that trend on the business side will catch up with consumers and we want to help facilitate. We think we’re leading the charge getting businesses some exposure into the crypto space by being the first to offer a program like this.”
Getting left behind
Many in crypto and fintech have said banks with card programs that don’t offer bitcoin rewards could be left behind and give companies like SoFi and Gemini the gift of growth over the next 10 to 12 years. Many of those same banks issue corporate cards for business customers.
Cryptocurrency rewards may not be an immediate disruption, but card issuers should keep a keen eye on the market, Brian Riley, Director of the Credit Advisory Service at Mercator Advisory Group, told Blockworks earlier this year, adding that major banks like Citi or Chase probably won’t do cryptocurrency rewards for a long time.
“Financial institutions have the luxury of looking to the startup world to see if new ideas find product market fit or not,” said David Sica, Partner at fintech-focused Nyca Partners. “If the concept takes off, then they should offer it in some form.”
He added that the market has reached a tipping point, where interest in cryptocurrency rewards by both individuals and corporations will continue to grow and, to the extent that cryptocurrency prices continue to rise, users will continue to be happy with them.
“Right now there is no option for points where they can go up in value,” he said.
With the rewards program, Brex will also launch an “education center” so customers and potential customers can learn about the risks of transacting in cryptocurrency and putting it on the company balance sheet, among other things.
Blond said many businesses are “interested in getting some crypto on their balance sheet” and called rewards a “low-risk way of getting some exposure” to it.
“This is lower risk than converting some of their cash,” he said. “This is rewards or points that they receive from their credit card, so there’s not going to be much scrutiny placed over how you use your credit card points.”
Travelbank, a travel, expense, and rewards app for businesses, will power the rewards program, and Coinbase will hold customers’ rewards-generated bitcoin and ether.