Mission Lane received conditional approval Friday to become a nationally chartered credit card bank.
The Office of the Comptroller of the Currency approved the fintech’s application to establish Mission Lane Bank National Association five months after it was submitted. This brings Mission Lane, which aims to bring affordable credit cards to consumers with limited access to traditional banking services, one step closer to issuing its own cards.
“Mission Lane was founded to leverage data and technology to facilitate access to fair, transparent credit for the estimated 73 million Americans who struggle to access traditional banking services,” the company said in a blog post Friday. “Our pursuit of a national [credit card] bank charter is a reflection of our continued commitment to that mission.”
The company expects to grow its customer base – currently around 3 million – and its 45-state footprint with the charter, which will enable it to offer credit card products tailored to various levels of creditworthiness.
“The conditional approval should dispel any concerns about the OCC's receptivity to chartering banks that focus on the needs of underserved consumers,” said Michele Alt, co-founder at regulatory consultant Klaros Group, which assisted Mission Lane on its application.
With the conditional approval, Mission Lane is set to become the first new OCC-regulated credit card bank in more than 20 years, Alt said.
Mission Lane Bank must have $35 million of initial paid-in capital, which must be raised within 12 months, the OCC said Friday. The bank must maintain a tier 1 leverage ratio of at least 11% throughout its first three years of operation.
The credit card charter was created through the Competitive Equality in Banking Act of 1987 – which also created industrial loan charters – and like ILCs, CEBA charters are not subject to Federal Reserve oversight.
CEBA-chartered institutions are narrow in scope, covering exclusively credit card operations. A CEBA charter would allow Mission Lane to originate and hold loans without relying any longer on its partner banks, Ogden, Utah-based TAB Bank and Salt Lake City-based WebBank.
CEBA charter holders are not permitted to accept demand deposits, or to accept savings or time deposits of less than $100,000 unless they are used as collateral for secured credit card loans. Nor are they permitted to make commercial loans, other than credit card loans to small businesses.
Mission Lane is still waiting on deposit insurance approval from the Federal Deposit Insurance Corp., along with other preopening requirements.
Although CEBA charters have not seen the same level of interest as other charters in recent years, Mission Lane’s application and conditional approval shines light on yet another avenue allowing fintechs and other firms to become de novo banks.
A spokesperson for Mission Lane did not immediately respond to a request for additional comment.
