Executive Summary:
Curve is a personal finance application, which enables its users to connect all of their debit and credit cards on one single platform.
Curve makes money from subscriptions, interchange fees, various payment fees, partnerships, and interest on the loans it issues.
Founded in 2015, Curve is now one of the fastest-growing FinTech startups in the UK. The company has raised $1.2 billion in funding to date.
What Is Curve?
Curve is a personal finance application, which enables its users to connect all of their debit and credit cards on one single platform.
Using Curve is as simple as it gets. First, you simply download the app on your iPhone, Android, or Huawei device.
Once signed up, you can add all the cards that you wish to connect. Original card details and data will not be passed onto merchants. Instead, Curve creates an encrypted token with which transactions are validated.
Curve, apart from allowing members to connect their cards, also offers its own Mastercard-branded debit card.
Additionally, users can earn 1 percent in cashback rewards whenever they shop using one of their connected cards.
Other features that Curve has introduced include the ability to switch payments from one card to another, customer protections of up to €100,000, various insurances (mobile, travel, etc.), and much more.
Curve has since entered the Buy Now, Pay Later (BNPL) space as well, enabling customers to pay over the course of multiple installments via its Flex product.
The service is available in over 30 countries including the United Kingdom, the United States, and most of Europe.
Detailing the Founding Story of Curve
Curve, which is headquartered in London, United Kingdom, was founded in 2015 by Shachar Bialick, Anna Mostyn-Williams, and Tom Foster-Carter.
Bialick, Curve’s CEO to this date, grew up in Israel where he was pulled from his high-school classes and enrolled at Tel Aviv University at the age of 16.
However, as it’s common in Israel, he eventually joined the country’s armed forces. “It gave me grit and perseverance, which are clear factors for success in business,” he later said about his experience in the army.
After leaving the military in 2002, Bialick embarked on his entrepreneurial journey, successfully starting and exiting companies such as a recruitment firm or a door and windows business.
He then decided to pursue his MBA at INSEAD, one of the world’s leading business schools, where he connected with his future co-founders Mostyn-Williams and Foster-Carter.
Quick side note here: Mostyn-Williams departed from Curve a year into the business while Foster-Carter stayed on until 2017 when he decided to join challenger bank Monzo as COO.
But back to the one co-founder that actually remained with Curve. After graduating from INSEAD, Bialick joined FinTech Checkout.com as its Head of Product.
Back in the late 2000s and early 2010s, the European Commission passed a set of directives called PSD1 and PSD2, which were aimed at increasing pan-European competition and participation in the payments industry.
This essentially ushered what many refer to as the FinTech revolution, which led to the emergence of various multi-billion-dollar startups such as Monzo, Revolut, Wise, and many others. Bialick, being at Checkout.com, was right at the forefront of that seismic shift.
Regulatory and/or technological disruption normally leads to an unbundling of various services. For example, a bank would handle everything from loans to sending money abroad. With banking systems now being freely accessible thanks to PSD, startups would focus on one aspect of a bank’s business (e.g., Wise offering substantially cheaper money transfers) with improved user experiences and oftentimes much lower fees.
However, since consumers do not like fragmentation, markets do eventually converge towards a few dominant players (e.g., Google in search or Amazon in online commerce). Bialick figured that the same would happen with all the FinTech startups that were launching left and right.
And Curve, which the team began working on in early 2015, was a direct response to that need for concentration. The team, since all 3 founders had pretty impressive track records, managed to raise $2 million in seed funding before Curve was even launched.
Said launch occurred just a few months later in February 2016. When Curve was first introduced in the UK, it offered what still remains core to its business to date: the option to connect all of your cards to one app.
In the first 1.5 years or so of launching the business, the team was focused on expanding the app’s user base as well as functionality. It introduced an Android app (08/2016), expanded across the European continent, and introduced cashback (01/2017) and its still-popular ‘Financial Time Travel’ feature (03/2017).
The firm’s speed of execution was rewarded with a $10 million Series A round that Curve announced in July 2017. With that being said, the company continued to double down on what worked before, which was to launch even more money management features such as cashback rewards.
By the summer of 2019, Curve had already signed up 500,000 customers and entered 31 countries, a feat that was rewarded with yet another funding round. This time, investors poured $55 million into Curve, valuing it at $250 million.
Three months after the investment announcement, Curve also launched a crowdfunding campaign, which enabled it to raise another £6 million in record time. Crowdfunding campaigns have been commonly used by other FinTechs such as Monzo or Freetrade to a) reward existing customers and b) get prospective ones excited about the business.
2019 ended with a few more banger announcements as Curve finally became available on Samsung and Google Pay, on top of partnering with wearable device makers such as Sony’s Wena or Fitbit. Apple Pay followed in early 2020.
Unfortunately, cracks also began to emerge. A report by Business Insider revealed that Curve was sending corporate cards, which incur higher fees, to customers who ordered consumer cards. The leaked documents also showed that Curve had far fewer customers than the firm claimed it had during its crowdfunding raise.
The negative press did not stop the embattled startup from going full steam ahead. In early 2020, it opened an office in the United States (Brooklyn) with the stated goal of later expanding into the country.
Meanwhile, the company also reached the inaugural mark of 1 million customers around that same period. Yet, challenges remained.
Curve’s services, after German payment processor Wirecard went bust as a result of an accounting scandal, became unavailable for multiple days. To Curve’s credit, the startup reacted swiftly, for instance by using Bialick’s former employer Checkout.com as their new payment processor.
The firm’s adaptiveness was rewarded with yet another round of funding. This time, in January 2021, investors poured a total of $95 million into the business, valuing it at over $600 million. A few months later, in May, Curve topped that sum up with another £9.4 million from the crowd (the largest ever on Crowdcube at the time).
It used portions of that cash to launch new products such as its BNPL solution Flex or the option to purchase crypto. Curve finally expanded into the U.S. as well (03/2022) after opening up an office 2 years prior.
But challenges remained, too. Months later, in July, Curve laid off 10 percent of its staff due to rising interest rates and inflation, which caused access to venture capital to dry up. Luckily, banks came to the rescue.
In December, Curve secured a $1 billion credit facility from Credit Suisse to finance the loans it issues via its Flex program.
Today, Curve employs over 500 people across multiple countries. The app, furthermore, counts over 4 million members.
How Does Curve Make Money?
Curve makes money from subscriptions, interchange fees, payment fees, partnerships, and interest on the loans it issues.
Let’s take a closer look at each of those income streams in the section below.
Subscriptions
The bulk of the revenue that Curve generates comes from the subscription fees it charges for its premium cards.
Curve offers 4 different cards, with one being free and the rest incurring a monthly fee. The paid versions are called Curve X, Curve Black, and Curve Metal, respectively.
Each plan grants users access to varying benefits. Premium features include Curve’s customer protection, fee-free foreign ATM withdrawals, being able to add business cards, mobile or car hire insurance, airport lounge access, and so much more.
Charging consumers for access to credit cards has been a common monetization tactic among banks. However, the previously-mentioned FinTech revolution upended some of those practices.
A few selected players, such as Amex (£575 annual fee in the U.K.), continue to charge their customers, though.
Curve pursues a similar strategy in that it provides members with dozens of perks to offset the monthly fees that they are paying. However, membership fees aren’t the only way in which Curve monetizes its various cards.
Interchange Fees
Interchange fees are another one of Curve’s income streams. Those fees are charged to merchants who accept payments for their goods and services.
The interchange fee normally ranges between 1 percent to 2 percent, depending on where you pay, for what you pay, what type of card (debit vs. credit) you use, and so forth.
Whatever interchange revenue Curve generates is then split with Mastercard, which issues its various debit cards.
Consequently, Curve incentivizes card usage by giving users access to instant 1 percent cashback. In some instances, members can earn up to 20 percent in cashback thanks to the firm’s partnership with Cardlytics.
Payment Fees
Curve, apart from interchange fees, also generates revenue from what I would largely describe as payment fees.
For example, customers on the free plan pay £0.50 per ATM withdrawal (with the first 10 not incurring any fees).
Moreover, Curve also imposes currency conversion fees on its customers (the first £1,000 being free), which are equal to 2 percent. Those fees are applied whenever you pay in another currency different from the currency of your payment card.
Another one would be frontend fees, equal to 1.5 percent, enabling users to use a credit card as a payment method to compensate merchants who only accept payment by debit card.
Interest
The U.K. Financial Conduct Authority approved Curve Flex back in September 2021, with the product being rolled out throughout 2022.
Curve Flex enables customers to split their past or future payments into multiple installments, which they can pay back over time.
In essence, Curve now competes with the likes of Afterpay and Klarna, firms that have raised billions of dollars and been acquired by even larger FinTech players.
Curve makes money from its BNPL solution in two ways. First, it charges interest on the loans it issues. A 9-month loan, for example, is fixed at 14.2 percent APR.
Second, Curve also generates revenue through late payment fees. Customers in the U.K. pay £6 if they miss a payment date after 14 days.
One of the biggest advantages that Curve has is the data it collected on its users. By tapping into their spending and bank account data, the firm exactly knows how responsible a user is with his or her finances.
This enables the firm to assess the risk of a given loan more effectively, which should ultimately lead to fewer defaults.
Furthermore, Curve runs a soft credit check to assess whether a user is eligible for a loan. Luckily for consumers, this won’t affect their credit scores.
Partnerships
The last revenue stream of Curve is what I’d largely describe as partnerships. More precisely, Curve powers mobile payments for the two mobile giants Huawei and Samsung in the U.K. and beyond.
Back in August 2020, Curve introduced the Samsung Pay Card, which gave Samsung customers “greater flexibility and control when managing their finances by offering a single view of spend, whilst also enabling a simple and secure way to pay.”
Around 1.5 years later, in February 2022, Curve unveiled another partnership with Huawei to enable NFC payments on Huawei’s latest smartphones.
Both partners shared one key similarity: they had issues, for whatever reason, attracting the required banking partners to power their own mobile payment solution that would rival the likes of Apple Pay and Google Pay.
However, Apple Pay closely controls the NFC technology in its devices (due to alleged security reasons), which means that banks are essentially forced to work with the tech giant. Meanwhile, the NFC tech can be freely accessed by third-party devs within Android devices, thus lessening the incentive for banks to work directly with the phone manufacturer.
Samsung and especially Huawei, given its troubled history, therefore had a tough time onboarding banking partners that were willing to work together with them. After all, the way Google Pay and Apple Pay make money is by taking a cut from the fees that the banks collect.
The two phone makers are thus tapping into Curve’s existing relationships with banks to offer digital payment options to their phone users. Curve, in all likelihood, receives a minuscule portion from the payment volumes those devices generate.
The Curve Business Model Explained
Curve’s business model strategy is largely predicated on becoming a super app, which serves any financial need a user might have.
As I’ve written above, regulatory and technological innovation naturally leads to fragmentation, which eventually converges towards a few selected players.
Super apps are a direct response to the consumer’s need for concentration. In the case of Curve, it aims to offer any money-management product users might desire.
The firm’s key growth driver remains the wallet, which puts all of a member’s cards under one single roof. By 2018/2019, Curve began to vastly expand the number of features it offers.
Partnerships with other technology companies are thereby key to fulfilling its super app vision. For example, it works together with:
- Plaid to provide members with an up-to-date balance of their cards prior to using them
- Checkout.com for actually processing customer payments, fraud detection, chargebacks, and so forth
- Cardlytics to offers members access to cashback rewards of up to 20 percent
- Fidesmo, a wearable payments enablement leader, thus enabling members to link their Curve account to their devices
- Zero Hash, which enables customers to earn rewards on crypto payments
… and many more. The fact that most modern FinTechs are API-first also enables Curve to quickly tap into their existing technology stack.
However, Curve obviously launches features without other partners, too. Examples include its ‘Travel Back In Time’ feature or Stocard competitor, which links all of a user’s loyalty cards.
In any case, the goal is to maximize the touchpoints with each user, thus enabling Curve to cross-sell them into a variety of different offerings.
Consequently, the more often members use Curve, the more information the app has about each of them. This, in turn, enables Curve to tailor its offers specifically to the needs of each user.
Another huge advantage for Curve is the decreased customer acquisition costs. Instead of having to advertise a new service like Flex, it can simply notify users within the app that they can now pay in installments.
Going forward, it can be expected that Curve continues to expand the feature set of its super app ecosystem. Example features could include the option to pay bills or seek mortgages, among many others.
Curve Funding, Revenue & Valuation
Curve, according to Crunchbase, has raised a total of $1.2 billion across 7 rounds of debt and equity-based funding.
Notable investors include Gauss Ventures, Vulcan Capital, Credit Suisse, Connect Ventures, and many others.
Curve is currently valued at £600 million (post-money) after raising £9.4 million from the crowd back in May 2021.
For the fiscal year 2020, Curve reported annual revenues of £9.9 million. However, the firm also lost £37.9 million over the same time span.
