Tl;dr – A Wall Street Journal suggests it was more than just the financial hit that ended the Bilt-Wells Fargo partnership.
The big news this week centered around changes with Bilt. The pay-your-rent-with-a-credit-card loyalty program and its banking partner, Wells Fargo, broke up. Bilt announced it will move forward with Cardless, a startup that is an embedded credit card platform. Notably, Cardless was founded by Michael Spelfogel, who is an alumnus of The Points Guy. This news comes in the same week that Bilt announced a massive funding round, valuing the company at north of $10 billion. Additionally, in a blog post highlighting all of this news, Bilt also teased the release of its Bilt Card 2.0, while also signaling its intention to move into mortgages.
What flew under the radar in all of this news was a report from the Wall Street Journal detailing the nature of the dissatisfaction inside Wells Fargo surrounding the Bilt Relationship.
In addition to losing ‘as much as $10 million a month on the card,’ there was concern about Bilt’s model being (or becoming) a money-laundering risk. According to the WSJ:
“When people charge rent on their cards, a third-party company sends a check for that amount to the designated landlord. That is easy for Bilt to track for a real-estate company that participates in its rewards program, but harder when it is a mom-and-pop landlord or other company.
– from WSJ article
The deal led to a weak internal audit rating within its consumer lending unit last year, one of the people said.“
Another interesting tidbit in the WSJ report is the fact that Cardless does not sound like it was Bilt’s immediate next choice. Allegedly, Bilt sought out a deal with Synchrony Bank before ultimately inking the partnership it did with Cardless.
Bilt’s been on quite a journey in just its five years of existence. Although its days of lavishing consumers with rewards have waned, a $10 billion valuation is nothing to sneeze at. We’ll see where this Bilt story arc takes us next.
