Platforms Use Cards and Deposits to Become Alternatives to Traditional Banks

FinTechs — especially platforms — are capitalizing on the continued buildout of digital solutions and products, including cards, to give consumers an alternative to traditional banks.

In doing so, and by offering a continuum of financial services, Block, Affirm, SoFi and PayPal, and are moving beyond the confines of commerce to become, in essence, banks themselves.

The latest earnings reports from these firms underscore the increased use of cards, buy now, pay later (BNPL) and direct deposit activity tied to a single point of access (an app) that keeps customers transacting not only with merchants on the platforms, but off the platforms as well.

The stock swings in the wake of earnings remain volatile, but the long-term trends are intact.

Cash App’s Deposit Base

In its fourth-quarter earnings results, Block said the Cash App Card, which is linked to Cash App, logged 25 million monthly active consumers as of December. Block estimated that 21% of all 18- to 21-year-olds in the United States used Cash App Card in 2024. In a sign of what one might define as cross-functionality of the banking services offered, the company also said Cash App paycheck deposit monthly actives grew 25% to 2.5 million.

“We rounded out key features for our paycheck deposit offering, giving eligible customers access to features such as high-yield savings, free in-network ATM withdrawals, paycheck allocation to stocks and bitcoin, overdraft coverage and free tax filing,” Block said in its shareholder letter.

“Our goal is to make Cash App the top provider of banking services to households in the United States that earn up to $150,000 per year,” the company added.

Affirm’s Card GMV Surges

In its fiscal second-quarter earnings results, Affirm said gross merchandise value (GMV) tied to its Affirm Card grew 113% to $845 million. The company’s active cardholder count grew approximately 20% quarter over quarter and is at roughly 1.7 million cardholders, according to a shareholder letter.

Affirm’s partnership with FIS, announced earlier this month, allows banks partnering with FIS to embed Affirm into their own apps, which extends Affirm’s reach beyond its own ecosystem.

SoFi and Direct Deposits

SoFi’s membership roster of more than 10 million individuals was up 34% year over year, according to fourth-quarter earnings results. Deposits were $26 billion, driven by direct deposit activity.

Meanwhile, lending originations in 2024 topped $23 billion, up 33% from the previous year. SoFi Money products gathered 51% year over year to 5 million.

The company is in the midst of a co-branded debit card program launching in the first half of this year.

PayPal Adds Debit Users

PayPal’s omnichannel “PayPal Everywhere” solution came with the September integration of its debit card with Apple Wallet for in-person commerce. There was also an expansion of its rewards program, letting users pick a monthly category of spending, such as groceries or clothing, to receive 5% cash back. (The company also has its PayPal Savings accounts.)

According to fourth-quarter earnings results, PayPal saw more than 20% growth in its Venmo debit card monthly active users.

“We added more than 1.5 million first-time PayPal debit card users in the fourth quarter, and debit card TPV was up nearly 100% in Q4,” PayPal CEO Alex Chriss said on a conference call with analysts.