Brim Financial launched the first non-FI credit cards in Canada with a bold claim that Toronto-based fintech will disrupt the C $ 470 billion Canadian credit card market with a focus on streamlining the exchange of rewards.

The Canadian credit card market is dominated by the top five banks, smaller banks and credit unions also offering credit cards, in some cases through a primary issuer. Unlike the United States, monoline transmitters have a small share.

Brim Financial is the only non-bank or credit union to hold an issuer license from Mastercard Canada, as well as its own BINs; no non-FI has an issuer license from Visa Canada. Unlike other countries, Canadian banking regulations do not require credit card issuers to have banking licenses or bank sponsors, but they must have a card network issuer license.

According to Visa Canada and Mastercard Canada statistics collected by the Canadian Bankers Association, in 2017, there were 74.3 million Visa and Mastercard credit cards in circulation in Canada, with a net retail volume of C $ 470 billion, not including advances of funds. The data includes information from all major issuers of Visa and Mastercard Canada, with affiliate issuers included in the major issuers data.

A rocky deployment
Brim used his website and social media to pre-register applicants for his Brim Mastercard, which is free, and his Brim World Mastercard and Brim World Elite Mastercard, both of which have annual fees. The company said it has received thousands of requests.

However, a five-month delay in the launch of its credit cards by Brim, which were finally introduced in July, has drawn criticism from consumers on social media sites such as Reddit, the Canadian broadcaster. CTV reported.

There were criticisms of the delay in sending credit cards and the fact that Brim had asked several applicants to provide proof of their identity, such as a utility bill and, in some cases, proof. of their identity by a lawyer or a doctor.

Normally, under FINTRAC (Financial Transactions and Reports Analysis Center of Canada) rules, provided an applicant has at least six months of credit history with a Canadian credit bureau, they do not is not necessary to provide proof of identity when applying for credit card. However, people with a credit history of six months to three years must provide a utility bill.

“Brim’s offer is quite interesting, but I wonder if millennials will take on offers from start-ups in droves,” said Christie Christelis, president of Canadian consulting firm Technology Strategies International. He added that the negative publicity regarding the late launch of the issuer and the lack of response to card requests would not have helped Brim’s marketing.

Rasha Katabi, CEO and founder of Brim, said about 1% of applicants were asked to provide additional information because they had less than six months of credit card history in Canada.

“In the future, we will no longer accept requests from this segment of consumers, due to the additional processing involved,” she said. “Regarding issuance delays, we have prioritized sending postcards to applicants in the order in which they requested a card.”

Cardholders can redeem their reward points for cash back or for purchases at merchants participating in Brim’s Marketplace. Purchases from Brim Marketplace merchants generate additional reward points.

“I think Brim’s rewards program and mobile card management app will inspire larger issuers to improve their offerings,” Christelis said. The Brim app includes expense management features and allows cardholders to temporarily block their card or block online purchases or specific types of merchants

RBC, Canada’s largest bank, has introduced credit card checks in its mobile banking app, to allow cardholders who have misplaced their credit cards to place or remove a temporary lock on their cards.

Several other Canadian credit card issuers also offer zero percent foreign exchange transactions, such as Home Trust, a specialty mortgage lender. “We try to be the most comprehensive card platform, so we offer 0% currency exchange fees, built-in free Wi-Fi with Boingo, installment plans, unlimited rewards and cutting edge technology. “Katabi said.

Although Brim has increased the annual fee for its World Elite Mastercard from CA $ 120 to CA $ 199, the benefits of the card are said to be more comprehensive than the benefits of credit cards charging CA $ 399 to CA $ 799 per year, Katabi said. Early applicants will not pay the higher annual fee.

Building edge
Katabi spent 20 years in the banking industry with TD Bank and Bank of America Merrill Lynch before founding Brim in 2016.

Brim’s business registration documents reveal that members of its board include Christian Lassonde, a venture capitalist who has backed startups such as Wealthsimple; and John Reucassel, former analyst at BMO Nesbitt Burns investment firm, a subsidiary of Bank of Montreal.

“We are bringing a transformation to the Canadian payment card and rewards space,” said Katabi. “Our goal is to be cardholder-centric and help cardholders get the most out of their lives and their everyday spending choices, whether it’s travel purchases or purchases. ‘big ticket purchases. “

Katabi cited a report by market research agency Bond Brand Loyalty, which reports that there are approximately C $ 16 billion in unused reward points in Canada, and that consumers are frustrated with how to redeem their points. Brim’s template allows users to choose an online or in-app transaction to take advantage of the offers.

Katabi said installment financing has traditionally been focused on traders.

“So we took this merchant-driven model and turned it into a merchant independent payout plan that is directly integrated with our credit card application,” she said. “Whether I’m buying a sofa from Pottery Barn in the US, visiting a mall in Hong Kong, or wanting to buy a painting from a gallery in Toronto, I can finance my purchase over 12, 16, or 24 months. by tapping a button built into my credit card app.

Brim charges 0% interest on installment loans on its credit cards, but charges a fixed up-front payment fee of 7% of the overall purchase price, which is added to the first statement. Thereafter, the cardholder’s monthly payments are the initial purchase price divided by the number of months they chose to install, plus a monthly processing fee of 0.475% of the purchase initial.

Katabi said merchants participating in Brim’s Marketplace have the option of funding some or all of the 7 percent fixed installment fee on behalf of buyers.

Brim isn’t the only company offering card-based point-of-sale installment loans in Canada. American-Israeli Fintech Separate it offers merchants in Canada and the United States the ability to provide installment credit to their customers on their credit and debit cards.

UK-based payments company Paysafe is launching its Paysafe Pay Later service in the United States and Canada. In the United States, Paysafe will offer in-store payment capability and offer online billing capability in Canada. Amy Gregus, communications manager for North America at Paysafe, said she has no plans to offer installment loans in Canada.

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John R.

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