Robinhood Completes $95 Million Acquisition of Credit Card Startup X1
Financial services company Robinhood has made a significant move by acquiring X1, a credit card startup, for $95 million in cash. X1, which offers a unique income-based credit card with rewards, has raised a total of $62 million in venture-backed funding since its establishment in 2020. While the valuation of X1 is not disclosed, the acquisition price seems favorable for Robinhood considering the substantial funding raised by other credit card companies.
This acquisition marks an important step for Robinhood in expanding its product offerings and strengthening its relationship with existing customers. With a slowdown in crypto trading and a decline in its core trading business, Robinhood aims to diversify its operations. The acquisition of X1 allows Robinhood to enter the credit card market and benefit from interchange fee revenue. Currently, Robinhood earns interchange fees from its debit card.
X1 gained attention for its innovative approach, underwriting customers based on income rather than credit scores. The company's stainless steel Visa card offers various benefits such as no annual fees, no late or foreign transaction fees, and rewards points. X1 has also developed software features that enhance the functionality of the credit card.
Overall, the acquisition of X1 provides Robinhood with an opportunity to expand its services and tap into the credit card industry, further diversifying its revenue streams.