The past six months have shown that companies in the finance sector are growing increasingly conscious of their social stances. Citi has positioned itself as a leader in the fight for gender pay equity. JPMorgan is continuing its effort to connect with the underbanked. Goldman Sachs laid out an ambitious goal for environmentally responsible investing. And both Goldman and State Street are taking progressive stances on corporate board diversity.
But big banks don’t have the market cornered on karma.
Expensify, a company that manages business expenses, launched a corporate credit card this month with a feature called Karma Points, which supports five charitable causes aimed at fighting climate change, homelessness and hunger, helping formerly incarcerated people reenter society, and helping youth transition out of foster care.
Every time an Expensify card user makes a purchase, the company will donate 10% of its cut toward one of those five causes, depending on which type of purchase was made.
For example, if a cardholder buys dinner at a restaurant, 10% of the interchange fee goes to an organization that fights hunger. If he books a hotel, 10% of the swipe fee goes to fighting homelessness. If she buys a plane ticket, the designated revenue will fight climate change.
“I think there’s a lot of anxiety about the direction the world is going, so we were thinking, what if we can actually offer ‘karma points’?” Expensify CEO David Barrett told Banking Dive in an interview. “So when you swipe the card, we’ll tell you, oh you just made a donation to this case. Click here to learn more about it.”
The genesis of Karma Points actually predates Expensify itself. Barrett would frequently pass the same homeless people in his San Francisco neighborhood, he wrote this month in a blog post. “I wanted to help, but I wasn’t sure how to do it without doing more harm than good — and I figured the most obvious place to help was not with cash, but food,” he wrote.
Barrett told American Banker he thought to design a system that loaded gift cards on demand with an amount equal to the cost of a meal purchased on a credit card at a restaurant; the gift card would be created while the server authorized the transaction. The system would limit the recipient to one purchase per day, with a ceiling of $10, at restaurants that do not serve alcohol.
But lenders noted several compliance and licensing challenges, and the idea went to the back burner.
Although larger companies tend to donate to big foundations addressing social and environmental issues, Barrett said he wants Expensify to give directly to on-the-ground groups.
“We believe the best way to help people is to ... cut out these intermediaries and trust the people on the ground,” he said. “All these problems are so big we can’t hope to solve them overnight, but we can solve them for individuals in a permanent fashion.”
Because donations are technically made by Expensify, the card user doesn’t choose where the donation goes every time the user makes a purchase. But companies using Expensify for business expense management can partner with Expensify to give more, under a system called Corporate Karma.
“You can say, ‘We want to offset all of our purchases [with charitable donations to the five causes],’” Barrett said. “So all your purchases approved by Expensify we will sum up at the end of the month and then we will figure out where your employees spend the most money and make a charitable donation, then bill the company. And those donations will be tax-deductible.”
Barrett said it was important to create a charitably focused rewards program in the card industry.
“[The industry is] kind of like a casino, the house always wins,” he said. “The more you do that math on how much these [credit card] rewards add up to, it’s shockingly little. Most people who have rewards cards end up paying way more in hidden fees and interest than in the rewards they get. And a huge number of rewards never get claimed because they’re so hard to get.
“When we sat down to differentiate this card, we did a big study of the rewards out there and were sort of shocked to find out there are no corporate cards with cardholder rewards. So we were trying to figure out basically, how do we make a corporate card that people will choose?” Barrett said.