(Bloomberg) — Wells Fargo & Co. will begin letting customers earn points and miles on their rent payments as the banking giant spends its push into credit cards.
The San Francisco-based lender has partnered with Built Rewards on a new card that will work on Mastercard Inc.’s network, the companies said in a statement Monday. Built last year and already works with some of the largest property owners and managers in the country, including Avalonbe Communities Inc., Blackstone Inc. and Cushman & Wakefield plc. Instead of coming down from the customer’s credit line, the rent payment using the card will come from the linked bank account.
Banks and payment networks have long sought to move the US$500 billion spent on rent each year to cards and other forms of electronic payment. Property managers offer tenants three ways to pay: via check, using an electronic bank transfer, or with a credit card. According to the Federal Reserve, about half the time, payments are made using checks or other paper methods, and renters who use credit cards are often charged up to 3% to cover processing costs.
“It didn’t take us long to really see the opportunity here,” said Dan Dougherty, executive vice president of co-brand partnerships at Wells Fargo. “You have rent, which is $500 billion every year – not only do you not get rewards, you have to pay a fee if you want to use a card. So let’s address that.”
According to the statement, card users will be able to earn one point per dollar spent on rent and perks for other purchases. For renters whose landlords do not accept credit cards or other forms of digital payment, BILIT will send a check on behalf of the customers.
Points can be redeemed with partners including airlines and hotel chains. Users can also point to a down payment when buying a home with a Fannie Mae or Federal Housing Administration mortgage.
“We were seeing the saying, ‘How is it possible that your biggest expense – rent – is the only expense where you don’t earn anything back? Ankur Jain, chief executive officer of BILT, which has tie-ups with multifamily owners. And managers represent more than 2 million apartment units. “Now, you’re getting something back for it.”
For Wells Fargo, the tie-up is another step toward expanding its presence in card lending. According to data compiled by Bloomberg Intelligence, although the bank typically ranks No. 2 in debit cards, credit cards that have a longer punch under its weight typically come in at No. 8.
To try to change that, the lender has unveiled several new cards. The firm introduced a co-brand credit card with Hotels.com in 2020, and introduced a cash-back card last year. Dougherty said Wells Fargo plans to pitch built in cards to customers through its branches and ATMs.
The built product marks the first time Wells Fargo and MasterCard have partnered on a new credit card in five years. As part of the offering, New York-based payment network Purchase created BitProtect, which the company will use to withdraw funds for rent payments directly from a linked bank account.
“We couldn’t be more excited about our partnership,” said Banita Sawhney, executive vice president of US financial institutions at Mastercard. “We’re really looking forward to getting this off the ground.”
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