Social Finance (SoFi), an online lending and banking platform, announced this past week that users of SoFi credit cards can convert their cash-back rewards to cryptocurrency.
Customers can apply their 2% cash-back points to Bitcoin or Ethereum, which can be invested in SoFi Active Invest, the retail investing platform of SoFi.
“There’s a thirst for more and more innovation that we continue to hear from our members,” SoFi CEO Anthony Noto told Bloomberg. “The No. 1 thing they wanted was stocks and fractional shares. The No. 2 thing they wanted was cryptocurrency.”
SoFi credit card users now have the option to redeem SoFi Credit Card reward points in cryptocurrency. The credit card, which is powered by Mastercard, gives 2% cash back, along with 2 rewards points for each dollar the card users spend on eligible purchases.
Customers can convert their rewards points into Bitcoin or Ethereum and hold the cryptos in their digital wallets or invest them through SoFi’s Active Invest platform. The company partners with Coinbase to hold customers’ digital assets. (Coinbase recently sold stock for the first time in an initial public offering.)
SoFi, an online lender, plans on adding 15 more digital currencies for cash-back rewards in the coming weeks, a spokesperson from SoFi told Payments Dive. The offering targets SoFi customers with a household income of more than $100,000 who are between 25 and 40 years old, the spokesperson said.
“Our goal with having 2% (cash-)back rewards is to allow people to choose to redeem into what they want. If that's crypto, then we have that,” the spokesperson said. “We also offer redemption into Invest, loan payments, or credit on statement.”
Customers can redeem their points that they earn instantly and use them toward different aspects of their portfolio.
Customers can elect to redeem points as cash deposited into their SoFi Money account, as fractional shares into their SoFi Invest account, cryptocurrency into their SoFi Invest crypto account, or as a payment toward their SoFi Personal Loan or Student Loan Refinance accounts. Their points will be redeemed at a rate of 1 cent per point.
SoFi is poised to go public later this year through a SPAC with Social Capital Hedosophia. The San Francisco-based SoFi also agreed to buy Golden Pacific Bancorp for $22.3 million in March 2021. The company bought the Sacramento, California-based three-branch community bank with $150 million in assets to accelerate its pursuit of a national bank charter.
Many companies are offering similar products as the appetite for crypto credit cards is increasing.
Gemini, a crypto exchange and digital wallet recently launched a similar credit card where customers can earn rewards in cryptocurrency. That company has partnered with Mastercard for its offering and already has 140,000 potential customers on the waitlist for the credit card, since it was first offered in January 2021.
Consumers will collect rewards in cryptocurrencies for each purchase, helping customers get accustomed to crypto transactions even if they are just accumulating rewards, Alloy CEO Tommy Nicholas said. Alloy is a digital identity verification company that is working with Gemini on approving customers and underwriting the new credit cards.
"You're not asking the user to necessarily be all-in on crypto or have a ton of crypto just to get started. In fact, you're sort of walking them into the crypto ecosystem by giving them an ability to earn crypto rewards," Nicholas told Payments Dive.