Robinhood, an online broker, has entered into an agreement to acquire X1, a free cashback credit card service. The deal is valued at around $95 million.
The X1 credit card boasts no annual fees, no late fees and no international transfer fees. The product comes with a mobile app.
Vlad Tenev, co-founder and chief executive of Robinhood, said that by getting X1, they were one step closer to meeting all the basic financial needs of their customers. He added that with the combination of X1 and Robinhood, they will be able to provide their customers with access to credit.
Deepak Rao and Siddharth Batra, the two co-founders, will join the brokerage team virtually to lead the company's new commercial arm. Rao will become the general manager for credit cards, while Tenyev will be his immediate supervisor.
JP Morgan Securities acted as financial adviser to Robinhood. The deal is expected to close in the third quarter of 2023 and will be paid for entirely in cash.
According to X1's website, by July 2022, the tech startup had raised more than $45 million in investment and had monthly sales of $50 million. By the end of last year, they had a turnover of a billion dollars. At that point, 500,000 people were in line for a credit card.
At the end of the first quarter of 2023, Robinhood reported a 5% decline in operating income to $207 million; while their cryptocurrency segment was down 30% to $38 million.
In May this year, the company recorded a 68% decline in digital asset trading volumes.
Robinhood will stop supporting cryptocurrencies such as Cardano (ADA), Polygon (MATIC) and Solana (SOL) from June 27.
