Crypto card startups are paying more in rewards than their products earn, CoinDesk reports, and some are running at a loss to build loyalty.
KAST moved from near break-even into losses as it spent more on growth, according to CEO Raagulan Pathy. Its Reserve account advertises 8% to 12% depending on tier, while the backing assets yield only 3.5% to 4%, so KAST funds the gap. KAST raised $80 million in March and says it has four to five years of runway. Bleap offers up to 15% on crypto holdings and 20% cashback, with a default of 1% capped at €500 per transaction and €3,000 per month. Its CEO said cardholders who only spend and collect cashback can be unprofitable.
Some are pulling back. Bybit EU replaced its 2% to 10% non-VIP cashback tiers with an uncapped 1% from August 4 for existing cardholders. Others see usage: Krak reports about 8.3 card payments per user per week and is approaching 200,000 cardholders.
The economics are tight because EU interchange on covered consumer debit is capped at 0.2%, against an average of 1.21% for exempt US debit in 2024, per the Fed.
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