More than a quarter of all U.S. residents use co-branded credit cards today to get discounts and other extras from brands they use regularly, but not all is rosy in the world of loyalty commerce. Major brands like Uber, Starbucks and Walmart have all pulled back from such projects over the years after failing to see the returns they were expecting. Now, tapping into the innovations of embedded finance, a startup called Cardless believes it has figured out how to make card schemes work better. 

Today, it’s announcing $30 million in funding to expand that business. Activant Capital, a previous backer, is leading the round, with Mischief (a fund co-founded by Plaid’s Zach Perret), Industry Ventures, Thayer Ventures, Assurant and strategic backer Amex Ventures also participating. 

Cardless is not disclosing its valuation with this round — nor is it giving an indication of whether it is flat, up or down on its previous valuation. For some context on that, when it last raised money — $40 million in 2021 — the valuation was just over $350 million. 

In the interim, the San Francisco startup has been growing. The company, which provides Visa, Mastercard and American Express card options, said that revenues — exact numbers not being disclosed — grew five-fold in the last 12 months, which was level with its growth rate year before. The company’s target market is the U.S. —  no plans to go abroad for now — although it works with global companies to reach end users, alongside large and smaller brands based out of the U.S. itself. Recent customers have included Qatar Airways and Alibaba, with the latter aiming services at small and medium businesses in the U.S. who use Alibaba to buy in goods that they in turn use or resell.

Cardless’s unique selling point is not that it helps companies build co-branded cards. There are dozens of companies, from newer tech companies like Marqeta through to incumbents like traditional banks, that already provided that. 

Instead, Cardless’s pitch is that it does this on a much more efficient platform, where the brands in question can build more customized card experiences to sign up and onboard users within weeks between planning and execution, to build rewards, and subsequently to manage observe how those products are performing.

“The credit card space is ubiquitous from the consumer angle, but from brands’ point of view, it is ripe to be disrupted,” said Michael Spelfogel, president and co-founder of Cardless, who said that 11 banks today operate “the vast majority” of co-branded credit cards in what is a $77 billion industry.

Features include the ability to set up card applications within existing apps, and then subsequently to integrate card management into those apps. 

Once created, rewards and other marketing can be incorporated and modified through a dashboard. Fraud detection and security are incorporated into the platform, as are usage analytics to help product managers understand what is working and what is not. 

There are also additional features like lending, which also opens the door to Cardless potentially also introducing services like buy now, pay later down the line. Similarly, it will be interesting to see what Cardless develops for future products, given the incoming U.S. administration signalling plans for new tariffs laid on goods coming in from certain countries. Since SMBs are one of the company’s focuses, could there be scope to account for tax calculating and other financial tools in the future? 

Spelfogel said that today, the bigger part of its business is “new”, meaning companies that had never offered cards before. He added that he expects that over time it will be more about convincing existing co-branded card companies to make the switch from their incumbents to Cardless. So the big question will be whether the market, longer term, is interested in disrupting the status quo enough to make that switch. 

Investors are gambling that enough will. 

“[Credit cards] is a really, really, really large market,” said Andrew Steele, who led the round for Activant. “Co-branded cards are not a derivative of a derivative space, where you end up with a very small potential addressable market…and large legacy folks cannot offer the type of service that Cardless can.”