57 million people in the U.S. have at least three major credit cards in their wallet, many of which have cash back and rewards programs. In order to help consumers make the most of those programs, today Los Angeles-based startup Wallaby Financial is launching its “one card to rule them all” Wallaby Card solution in private beta, which aims to provide a smart layer on top of consumers’ credit cards. The company offers a single card that combines all of a user’s existing credit cards into one, allowing users to set preferences and route purchases to the credit card which offers the best rewards on purchases.
The idea for Wallaby came to founder Matthew Goldman while he was a consultant, which required him to travel often for business. While pumping gas one day he was notified that he would have saved money if he had used a specific credit card, which he had in his wallet but hadn’t used for that purchase. He realized that he probably used the wrong card for purchases on a daily basis, so set out to create a smart layer for credit cards that would do that thinking for him.
“I realized that was a real problem here that’s painful to people because they’re actually losing out on money essentially,” Goldman said in an interview. “I set out to develop a product that allows you to have a single card that you always swipe, and every time you swipe it, based on the cards that you have and your preferences, we automatically route the transaction to the right card, that will earn you the most rewards for your preference.”
The service supports any U.S. consumer card, including AMEX, Visa, MasterCard, and Discover, and the card can be used internationally. The card, issued by an unnamed sponsoring bank, doesn’t provide users an additional line of credit. Instead, it manages their existing accounts, meaning that users can get a Wallaby card using their name, phone number and social security number, much less information than is required for a typical credit card application. Once a user’s identity is verified, they’re mailed a Wallaby card, which can be used in person or online. They add as many credit cards as they want to their account, and set their preferences – whether they prefer to earn travel miles, cash back, etc. When they make a purchase, Wallaby decides which card should be used based on the potential for rewards and the user’s preferences, and instantly routes the payment to that card.
Purchases and rewards earned are instantly reflected in the user’s account, which is available online, and will soon be available on an iOS app. The app will also feature push notifications, so users can see how much they just saved or earned, and a daily, weekly or monthly snapshot of their purchases. While only an iOS app will be available during the beta launch, Goldman said they will be expanding to different mobile platforms. The company is starting by focusing on credit card rewards programs, but they will be extending their purchase preferences to include interest rates, allowing users to specify which cards they’d like to use based on the interest rate on the specific card.
Since Wallaby doesn’t replace existing credit cards, rather it provides an additional layer to them, users still receive their regular monthly bills, and pay their bills as they normally would. Eventually Wallaby will be introducing an annual fee for the card, but the first 1,000 beta users will get a free lifetime account, and the next 5,000 users will get a free annual account. The company also plans to make money by letting merchants offer deals to consumers based on their purchase activity, and enabling credit card companies to upsell existing customers, or sell to new customers.
Consumers can also choose to link their Foursquare or Facebook accounts to the card, so when they make a purchase they broadcast a discount they received on their Timeline, or automatically check in at a store when they make a purchase there. The company is also planning to partner with digital wallet and loyalty startups, though no partnerships are in place for this launch. “Part of our monetization strategy is to allow both credit cards, banks and merchants to take advantage of this platform we’re creating where we have a consumer’s wallet and information about what kinds of preferences they like, and enable people to connect those things together,” Goldman said.
While Goldman said he’s not aware of any credit cards offering this second layer of consolidation, there are several other companies trying to help consumers consolidate and simplify their bank accounts (Simple), rewards accounts (Points.com), and wallets (Lemon). “We’re not aware of anyone else doing digital wallets with a physical card with an emphasis on rewards like we are,” Goldman said. “We’re actually trying to solve this offline problem.”
Wallaby was part of Los Angeles-based startup accelerator MuckerLab’s first class of startups, and Goldman said they’re currently in the process of closing a round of angel funding. He says the focus right now is on getting an initial base of beta testers in the U.S., though they do plan on expanding internationally down the line, but it’s dependant on adhering to local credit card regulations. The biggest challenge for Wallaby will be communicating the company’s value proposition to consumers. While everyone wants to get the most out of their rewards cards, not everyone will want to replace the cards in their wallet. If Wallaby can communicate their value proposition to consumers, while also getting merchants and credit card companies on board, they could be an attractive partner for digital wallet companies, and offer a new, offline approach to consolidating rewards.