Crypto Card Issuers Face Profit Squeeze in Cashback Race of Up to 20%; KAST Swings to Loss
Crypto-based payment card companies are struggling with profitability as they offer high cashback rewards and deposit yields to attract customers. Firms like KAST and Bleap are finding that these aggressive acquisition costs are outpacing their actual revenue, forcing some to scale back benefits.
Why it matters
This trend illustrates the sustainability challenges facing fintech startups that rely on high-incentive models to compete in a crowded digital payments market.
Add preferred source Crypto payment card companies are competing to win customers with cashback of up to 20% and double-digit deposit yields, and are suffering deteriorating profitability as a result. KAST offers 8-12% annual returns on deposits, but the actual yield on the assets backing those products is only 3.5-4%, pushing the company into the red. Bleap also says customers who only use the card for payments and cashback are not profitable. With the EU capping issuer fees at 0.2% and U.S. debit card fees averaging 1.21%, it is hard to cover such high reward rates. Bybit EU and Bleap have already scaled back cashback, and companies are broadening revenue sources by combining trading, lending and staking.
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