Lithic Product Update: October 2023
Welcome to Lithic’s product newsletter. This edition covers:
- Common Credit Card Traps
- Recent Product Launches and Updates
- Open Roles and Recent Podcasts
We’ll be at Money20/20 next week. If you’re interested in connecting with us, you can stop by booth 13235 or Canaletto’s during the day, or reach out here.
It’s a (Credit Card) Trap!
We recently expanded our support for commercial charge card programs (more on that below!) so credit has been top of mind lately.
Earlier this year Pritee Tembhekar, our Head of Product, gave a presentation at Fintech Devcon on the fundamentals of offering credit cards. You can watch the full presentation here.
As we continue to see more credit and charge card programs, we think it’s worth revisiting part of what Pritee covered – namely, important traps that credit card programs should watch out for.
Start with customer value, not revenue potential.
Why do your users want your credit card? And what do they expect to get from the card product?
A good example is rewards. People sometimes look at credit card interchange rates – which are often higher than for other card products – and get excited. But they overlook that credit cardholders expect rewards, which reduce the interchange a card program ultimately keeps.
So always start by asking: what does my cardholder expect to get out of it? What’s in it for them?
Think through your capital plan.
In credit card programs, the fundamental “product” being sold is capital – money provided up front. As a result, credit card programs have a more crucial need to manage their cashflows and capital.
Fintechs often expect that they’ll work with a capital provider – maybe your bank sponsor gives you a credit warehouse or an investment fund buys your receivables (if that’s gobbledegook, check out our capital markets primer podcast with Robin Poore).
But to get a capital provider on board, your credit needs a performance track record. So you’ll probably need to be prepared to loan your own funds to customers until you have enough credit performance data.
“Be quick, but don’t hurry.”
That quote from John Wooden is a much better mantra than “move fast and break things” when it comes to launching a credit card program (...or any fintech program, really).
Running a credit card program isn’t just like running a debit program with delayed repayment. For starters, you have a lot of stakeholders to manage – bank partners, card networks, capital providers, and your card processor (which is Lithic, naturally 😊). Card programs often have headcount dedicated just to managing these relationships.
Then there’s the fraud risk. Bad underwriting and risk management is a great way to lose a lot of money fast. Credit card programs need to be ready for fraud from day one.
And then there’s the regulations. Our lawyers made us include this…but it’s true! Credit cards come with their own sets of regulatory considerations, which can often be more demanding than debit or prepaid card laws. So if you want to play in the credit card space, it’s best practice to work with an experienced lawyer.
In sum, when it comes to credit card programs, it’s great to be quick, but don’t hurry so fast you set yourself up for longer-term failure.
Lithic Product Updates
We released a whole slew of new products and features since our last product newsletter. So buckle up.
Accounts and ACH Products
We released new Accounts and ACH product lines. These additions seamlessly integrate with our card programs, and enable you to:
- Programmatically set up general-purpose accounts to help administer your card program
- Simplify fund transfers for card programs via ACH
- Process settlements faster
Commercial Charge Card
We expanded our support for credit programs with our first full stack credit product: Commercial Charge Card. The new offering combines our Cards, Accounts, and ACH platforms, and is designed with flexible modularity in mind.
Lithic customers can now extend financing to their users and add new lines of revenue. Read more about the release – including how Parker uses Lithic – here, and read our documentation here.
In financial services, tracking every penny matters. Every day, a card program needs to settle with its relevant card network to cover daily card activity.
To that end, we recently launched our Settlement API. With our new endpoints, you’ll have a clear and simple view into every daily network settlement, and can reconcile settlements down to the penny. Read more here.
Always-be-improving your API
We’ve made a host of API updates (dare we say upgrades?), including:
- We released an Idempotency feature to ensure you can confidently resend an API request without worrying about the request triggering multiple, unintended events. Read more here.
- With simulated webhook events, you can now send sample webhooks to test your integrations in our Sandbox environment. Read more here.
- We migrated all API endpoints to a cursor-based pagination system, which enables you to retrieve data faster and more consistently. Read more here.
- We’ve expanded our resend API endpoint so messages can be resent regardless of their previous delivery status.
- We’ve added webhook alerts to notify you immediately if there are any issues with any attempts to upload transaction dispute evidence. Read more here.
- We refreshed our website!
- We have a number of open roles, including: Head of Sales, Senior Engineers, and a Senior Support Engineer. If you’re interested, you can apply here.
- We just released a podcast with Paul Kesserwani, CEO and founder of Cushion, where we dive deep into BNPL – including lots of novel insights Cushion has into consumer BNPL usage and behavior. Listen on Apple Podcasts, Spotify, or anywhere else you get podcasts.
- We’ve also released podcasts with: M1’s CEO, Brian Barnes on building consumer fintech products and buying a bank; Gusto’s Jeff Forkan on payroll tech; and with Ansa co-founder and CEO Sophia Goldberg on her lessons from Adyen and building Ansa.