Karta's Premium Stablecoin Card for Global Travelers

We are doing a whole day dedicated to the role that cards play in the world of modern money. Stable Ash Live is a modern money show, so we spend a lot of our time covering founders, teams, builders in this space who are building things like on chain card programs. So today is is really sponsored by Arculus and the Compo Secure team. So give me a give me a sense of where that might fit into the the business at Carta, then, yeah, bring us into what Carta is for those who are just getting to know it. Yeah. Absolutely.

So about what how Compo fits in our role, Compo best, you know, makes the best credit cards. We our credit card is made from Compo. Kudos to them. So a bit about Carta. You know, Carta is the credit card. We call it for the private banks. Some of the largest private banks in the world distribute our credit card on our behalf to international clients. So, you know, we have a B2B2C model that allows us to go global from day one in capturing, I call it the

world's wealthiest customers from all over LATAM, Europe, and Asia through our 70 plus private wealth management network. So all of this without having to sell stable coins for crypto in any sense, we think that's the best way to deliver and bridge the gap between stables and trust buy. Have some of the biggest spenders in the world using our credit card, and we don't have to even tell them about that. Yes. It's powered by stablecoins.

Biggest spenders in the world. Alright. I'm gonna have to ask I'm gonna have to ask about that. How on on that topic, what does that what does that mean? How do you know that they're the biggest spenders? Like, these are businesses. These are high net worth individuals. How are you measuring that? And what what does the user base look like right now? Maybe more broad. Yeah. So it's high net worth individuals for now. We're hoping to launch corporate cards at some

but, basically, the because of this rationale, they are based on their brokerage account, and every single they open an account for you. So I couldn't name all the banks that we have, but let's say tier one bank, one of the, you know, top five banks in the world. In order for you to open an account with them, you need to have at least $10,000,000 sitting with them. So these are the clients that we're getting. Clients from the pro wealth banks that have accounts.

And the bigger your brokerage account, the larger is your spend. 9% 9.9% of the users are users. So we're calling, you the the world's top spenders.

Yeah. Give give us a sense of, like, where in the world you're targeting when you're thinking about growth, when you're thinking about user adoption. Where are you based? We were at the top of the show talking with Liz from who leads business development on the MetaMask card and something we were discussing with her is just like how unique go to market is for different parts of the world and how you bring we were talking specifically for her for about, like, Brazil, other parts of Latin America.

What does that look like for for you guys and how you're growing card adoption? So for us, naturally, you're in Miami and the majority of reporter banks are seeing it in Miami as well. Naturally,

the vast majority of clients as of now are it's LatAm. You know, we're trying to conquer most of the LatAm corridor, but we're we could we could expand in through our same border banks into Europe and Asia as well. Within LatAm, we truly got on the banks. Argentina and Colombia are the largest customer.

From LATAM, at least, we have a very large virtual customer base. And and where does that become personal in terms of why that is the case? Do you feel like that is that that was an intentional move on your part in terms of how you built and deployed this, or is this something that you feel like is more due to the role that the functionality of these cards have in in that part of the world? What's the balance the balance there in your view?

Yeah. So there's a there's a common problem that happens in Brazil that when you issue credit cards, when you travel, their use roughly goes from six to 10% every time you swipe a card when you travel. Card offers you the flexibility of paying your credit card in The US from a US bank account, or you can also pay low pitches like this, a Zelle equivalent that would exists in Brazil. Basically, we collect on Fiat and then disable coins, and then we settle.

Without launching this idea, this business is about, you know, and solve this type of problem. Brazil had the most sophisticated legal infrastructure to cards use the coins. Argentina, Mexico, Colombia are so very these type of situations, but I think Brazil is leading the race in this type of new infrastructures.

You said Brazil

Brazil is leading the way in in your view for repeat that last part again. Where does that conviction come from? Yeah. So when we're thinking about where do we launch the pay locally option about how to pay your credit card bill, you know, from from your own country? Say that it it takes example of Argentina. Argentina maybe has a larger pain in the sense that it's your Argentinian credit card when you travel, but Brazil has more than clear laws and how do you stay. No. It's not not as clear as it is.

In Brazil, it is. Right? So that's we made the decision. The the impact might be might be bigger, but it was a lot cleaner, you know, for me to run my compliance from The US and Brazil as well. It was just easier to launch given how clean they are in their laws. Yeah. Yeah.

Give us give us I know this is the first time we're we're talking about Carta itself. Give us some history on the company. What does the team look like right now? What's the current moment of growth that you're in? Is the team distributed? What's the kind of high level of of the team and and where it stands? Yeah. The majority the team is based here in my

across LatAm, and we have an office and a team in Brazil. Technically, two years ago, but the idea was born fifteen months ago. We we end up the year with 40 important banks to distribute a credit card on our behalf of more than 70, and we wanna continue get up to maybe 100 or one fifty towards q three or q four. We have a very small team. We're only 18 people. Maybe we can spend maybe five or six more guys in the team that's marketing, some engineers on the product side. No more than that.

We think we can get to a very large business with a very small team. I'll say very soon. But, like, we just raised a $125,000,000 warehouse facility. Think and it's the only we think we are the one of the fee companies that's bridging Tratify, you know, a traditional large warehouse lender, a power on credit card for the use case that we have. So So effectively, we're taking stratified lenders, sending FIA into a smart contract that powers our credit cards. I think there's

yet to be seen data on a large scale, especially these type of issues that we have. Right? This ICG. So we're gonna use that. That's fun to scale the momentum of our program and close the LatAm corridor with the border banks, and then also replicate the same B2B2C in Europe and Asia as well. Yeah. Let's let's double click into that specifically. That seems really cool.

So break break down the more of the technical side of how how you've architected this, that specific point around how that smart contract is built and the function it plays. That seems really unique to me. Can you walk us through that start to finish on what that looks like? And maybe what what specific capabilities that unlocks for cardholders today or or in the future?

Yeah. So so basically, any traditional credit per program, they have a a warehouse facility where they have they have a lender, and they have, you know, an SPV and the the lender has DACA's control agreements and the bank accounts of the of the of the companies. For me, it was complex structure because we are yet to be seen to to find a large lender in the crypto space that can give you, you know, a 90 plus advanced rates, very low cost of funds at the scale that we operate.

So we have to go with the stratified lender. So it's getting comfortable with the stratified lender to fund us. SPV for sure, but the SPV is gonna fund a smart contract that powers our credit cards. So, you know, we use our our great partners, Rain, in this. The money that we have from our lender goes on to power the smart contract that we own through our our our card issuer, Rain. And through that, that gives us spending power for the cards.

So in that side of things, it was quite challenging to find trust by lender to get comfort with our permission. But luckily, because we have such a pristine portfolio, you know, we have, you know, the wealthiest customers in the world, no losses, no delinquencies. They got comfort given the business we're going after.

And, of course, once they understood the flow of us and once they understood that we run anything very compliantly, they got comfort and, you know, they gave us, you know, full $1.25 to run the business. $1.25. And this is this is the size of this warehouse

facility that you're talking about? Yes. Okay. I'm I'm actually learning in real time here with you about what is the where that term warehouse, that's, like, the word that people use to describe this part of the stack? Yeah. So basically Is that is that a large warehouse? Is that a small warehouse? Like, where where does 125,000,000 fit in the, like, typical curve of, like, these credit card programs? That's I generally have no no idea how that process starts. I like to think it's a very decent warehouse.

They most start at 50.

We were offered way more, but we think, okay. $1.25 is a good size. After that, hopefully, there'll be more crypto lender. T one banks that, you know, get comfortable with our program. But, yeah, think it's preferred. What does that do? That's like a limit of that's like essentially a credit line on behalf of Carta that you guys have in in the total sum of those who are on the platform today. Is that what that looks like? Yeah. So, basically, we have to power the receivables.

This is the asset that we pledged at the the lender. Right? But fund our users purchase. Basically, every swap they they make, all those receivables, all the spend they're making, it's pledged against this. And with the full one twenty five, allow us to power, you know, thousands of users with ICP. So I'd say comparables, think, ramp on the early days, they raised $1.50 with Goldman Sachs or the early lines they have. Ours are fairly decent. Yep.

They've done well. They've been doing well lately. They've they've been I was joking that ramp. They've built a good business on top of that. Okay. So walk us through how I mean, where my mind goes here, if I'm being direct, is like, there's a lot of competition heating up in this lane right now for which is great. Like, think that's awesome.

The the primitives of things like Arculus, things like RAIN, things like Stablecoins themselves or the issuing partners you can work with to embed things like that in these products. Like, the availability to get to market with something like this, I think is very, in some ways, easier than ever. But in other ways, there are, like, very, very difficult things on the back end that, you know, things like these warehousing deals.

And what are what are some of those pieces in addition to this warehouse that you feel like are, like, really key defensible competitive advantages might be the best way to say it? Like, what are some of those things that you feel like you guys wanna do better than everyone else in this category, and what gives you that where do you feel like those competitive advantages will be three to five years' time when you're looking back? Yeah. Absolutely. That's a great question. So I think for I think

there are a lot of players a lot of players doing debit cards, bank accounts, stablecoin cards, such as the debit card. Haven't seen much credit cards in this space. So that's one thing. We operate specifically on credit. Everyone's very credit driven. And when was the last time you travel with that debit card? And that's one thing. Second thing, I think in this type of businesses is, I mean, one silver bullet and that's distribution.

So I think nailing that BWC and getting to these type of customers, you know, that Amex and Chase pay $2 to $3,000 to acquire. Me getting them for a fraction of that cost for these partner banks is what's key to this business. So I would say that three modes that Carter has is that one is distribution that I told you about. I know it scaled to seven businesses effectively. And then I like to pitch you these very large banks.

They would never sign with a, you know, six day a series B company unless, you know, the the the need was product was good. So nailing the distribution, getting the product is quite, you know, quite important. And third, so for me, getting the warehouse, getting comfort from a trust high lender into stablecoin cards, get a great advance rate and and very low cost of funds, which is quite challenging. So I'd say it's the warehouse, the distribution, and ultimately the product. You need all

like, new consumer trends that's going on. And if you're being honest with yourself right now, which of those three are you doing the best at, and which is the one that you feel like you have a needs improvement score if you're being self aware in the business right now? I'd say doing great on the distribution. We're doing great on the product as well because ultimately,

once our user the card, they fell in love with it because of the WhatsApp consortium built on top of it. I'd say we still need to do a better job at our cost of funds, which, you know, it's great. It could be better. It's because it's stratified and mixed with stable coins. The the whole shenanigans is so quite

What is what is cost of funds? How do you define what that means? Is that sort of on the partner bank side of the equation? Break that down. No. It's more so on the lender side of the question. So it typically starts, you know, sulfur plus

so let's say it starts at the first $10 that you consume, it's sulfur plus plus two x. The next 50 is so for plus X. So it goes down over time. So it's basically a benchmark that lenders use, you know, to price your model. And that premium depends on the riskiness of your model. So when we, and, know, look for, for, for lenders, we got, like, three or four offers. We ultimately went with the best one. But ultimately, that's the tricky part.

Get to the level of cost of funds that may versus other credit cards in the market. So if I'm if I'm really, really dumbing this down to a normal person's

mentality. It's sort of like you as a business, Carta, going to what maybe a first time home buyer would do when they go to a lender for their mortgage. It's like you're kind of showing them, hey, here's my income, here are my liabilities, here's kind of the the context in which I'm bringing to the table. What's the best rate I can given market conditions, given all these things, what's the best rate I can have on this mortgage?

Is it a similar type of experience that Carta has where you're bringing, like, the context of the business, the users, the history of the company, like, and then these lenders are effectively competing and and offering a similar type of model back to you, and the lowest the lowest one wins, or maybe not even all the time the lowest one wins. I'm sure you guys have to pick the right partner for you. And is that I know that's oversimplified, but is that directionally correct?

Definitely. I would say yes. So, yeah, like, on one side, just look at a a long tape, which is our performance. So no losses, no delinquencies. There we would pick the best one. Then on the user side, it's more so at least on my end, guess is a brokerage account. That's where our reports with a check-in company, check credit score because ultimately they're in But yeah. So, conceptually, I think you were there. Yeah. Distribution, you mentioned, is a strength.

Where do you think that has come from, and how do you plan to maintain and and kind of defend that over time? Yeah. So it's basically delivering great service to the to the end users, one thing, also great service to the banking partners. So as long as your product is working good and, we give them the tools to scale the, the, the operations in there, and also of course, not launch any products competing to my distribution network. So let's say you have bank XYZ.

I'm not gonna offer investment accounts, you know, in right now. Right? I'm only one of the credit cards, the best credit card that's out there, the best WhatsApp, concierge, the best corporate card. As long as we, you know, know our place in that sort of things, I think the distribution is gonna remain intact. Tight. You've mentioned the WhatsApp concierge a few times.

Talk a little bit about this and maybe for, like, a US focused audience, how impactful doing something like that is to the success

of of Carta today? Like, what is that feature, and and why is it strategically important? Yeah. Because ultimately, the the Carta is just to wedge and to, you know, get into But ultimate different is that it sounds trivial trivial and it was Latinos. Even Brie, the entire card during the activation, notifications, reversals, these fuels, chargebacks happen on WhatsApp. And also the card has a concierge on on top of it, also on WhatsApp. So it goes from book me flights, book me hotels, book me a car rental.

Can you call this, you know, this company that's charging me twice? I need to call full multi agent operation, you know, do stuff on your behalf. And that all all that happens through WhatsApp. The same way that, you know, WeChat is like the super app of in the in nature, right, I think WhatsApp moved towards that in in in LatAm and hopefully in The US at some point. So Carta Credit Card Extremes happens on WhatsApp. And that's what all the credit cards in the market. Really? Yeah. Okay. So

I'm looking here on the site. You have AI assistance. Carta AI is an intelligent financial assistant providing AI driven financial insights, automated transactions,

in app customer support. So it sounds like you have, like, is that the same thing as you're talking about this, or is that is that a separate part of the the platform? This, like, AI assistant? That that's that's pretty much it. It's an assistant that handles everything for you. We had a we had a customer yesterday. I need to pay my BBI company renewal trip. Here's the link. Can make you the payment for for me? So the agent goes in the website and we generate the one time use card just for that payment.

We'll make the payment on your behalf. Right? So you can think of that an agent concierge can do for you. We do it through. That's so cool. How we've we reported,

I think, last week on some of these agent based payment methods that, you know, we've seen ramp pretty notably start coming out with in their in their beta with stablecoins. How are how are you guys thinking about that right now? Is is that from like a for me, it sounds really unique that you would be able to issue a a card number for a specific payment only. Seems like when I hear that, I'm like, that doesn't sound very cheap. That seems like a very expensive way to do it.

But maybe that that kind of feeling is wrong because talk a little bit about how you're making that work. You're issuing a card number for these individual payment requests these agents are going and using these cards to spend. This personally for me sounds amazing because I'm in the camp of like a user where I'm like, I will pay a premium to trust someone to to do this for me, but it also kind of gives me a little bit of like red flags. Like, how are you securing this? Where are the limits around this?

Like but it's so fascinating. Just let's double click in here a little bit. Would love to better understand how you're making this work.

I think you'll you'll have to invite Michael Fowler, the CTO, to you know, give you, like, a full overview. But, basically, the principle was our main goal is to make I mean, as much as, you know, Rob is making you save time and money, we'll save time.

We want you we don't want you to lift a finger of anything in your financial life, whether it's paying for your kid's school, whether it's paying a renewal on your on your your BVI, Navy's company that you have abroad, you know, sending flowers to your to your girlfriend through WhatsApp. The principle is behind we want to do everything for you. We want your system, you know, And if you have your what you like to buy, where you like to shop, we have your card information. We can pretty much do everything for you.

And that side of things we have, you know, we have great processors. We have great, resources to handle this in a very safe way, but it's more so coming from the principle that we want to be there for the user. And for example, let's say Amex used to own this corridor, you know, the BWC, the small Amex IDs. Even if Amex comes back to the business, let's say, even if Amex is offered for free, our users wanna stick with KARA because of the level of service that we give you. They wanna they don't wanna switch.

So it's more so, you know, being convenient for the user. Do you think that's gonna be the driving or one of the driving narratives

for why someone would want to download this? Like, are you gonna lead pretty hard with this? Like, I'm I'm looking at the site right now, and AI assistance is kind of like in this feature category. Feels like it's kind of a cherry on top of why you would use Carta. For me, this sounds like a very core, like, I would just use this for this purpose. Are you guys thinking about leading or maybe even spinning off this in like a specific brand with a specific identity? Have you thought about that?

I mean, this just seems like such an important, like, psychological role to play in someone's financial life. So to be mostly advertised,

card, that the card works, is gonna be good for you. You're gonna have it on WhatsApp. We try not to expand so much on the otherwise, you know, maybe you're gonna get confused or maybe you don't believe me because you, you know, get the card, use it, you play around with the concierge, see how much we can do for you. And once that happens, the user falls in love with the product. Right? Autos, how to communicate this properly of how much we can do for you.

But for now, the user needs a proper credit card that has a very high spending power. They can go buy a, I don't know, a 150 bahtion once they get a transaction. That's where the the card is tailored for these type of users. And then once this is called the concierge, it's okay. And not on service. Right? But to your point, I think not right now, but ultimately, we need to, you know, let people know that these type of features exist in that. Do you I have like a last last question here.

Do you do you think this whole conversation around agentic commerce or this the relationship between

agents performing actions financially on behalf of users, is that something that as you've built this product directly, you are realizing like there's magic here that is unpriced and un like like this is a kind of a gravitational shift, or are you more in the camp of, like, this is nice. This is more of a feature. People are kind of overhyping this.

Like, where where do you fall within those two camps? First camp, for sure. Big time, like I told you, we don't advertise this to anyone. We don't even notify the user that this exists. And we have a Slack channel of all the conversation, all the tasks that that that users are asking our agents. It's unlimited the amount of the amount of stuff they ask. I mean, I gave you the example about paying the subscription on the VDI, sending flowers to their mom. It's just exponential. I think I'm on the on the first gap.

I'm still amazed of how how these agents perform. I don't think it's overnight at all. That's wild. Okay. Super, super interesting. I know we're we have to pause here and and probably do a a part two to this. Any any final thoughts on what people can expect from Carta in the coming months? Sounds like you have a CTO that's very involved, like product features or any anything that people can be looking forward to in the near future as we close? I would say, we had, at first, a restriction only for LatAm customers.

We're about to roll out our European and Asian customers as well.

If you have a brokerage account at one of these partner banks that we're going to to announce, it's a Support yourself. Awesome. Well, Freddie, thank you for the time. Really appreciate you joining us on on this show, and and I'm excited to watch this grow. The idea of features like this get me excited as someone who is definitely in the market for, like, an EA or something like it, but probably doesn't have enough budget to afford a great one. So this is like a perfect tool for me.

But yeah, man, thanks for thanks for joining us on our card focused day here at Arculus. Really appreciate it. Yeah, man. We'll have we'll have you guys back on soon. Absolutely. Thank you for having me.