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Product review: Karat

My summary of Karat before using it? I know that Karat is geared towards influencers, people with followings on social media platforms like TikTok and Instagram. I’m probably not part of Karat’s target audience 🙂

How does Karat explain itself in the first minute?

“The back card for creators” is the first thing I read on Karat’s homepage. I can’t help but think about Nando’s – a restaurant chain that specialises in Portuguese-African food – black card, which allegedly only handful of celebrities have. This card allows them to free Nando’s food for a year, free to the card holder and four of their friends. Does Karat offer the same kind of special benefits to the holder of a Karat card?!

When I scroll down the Karat homepage, I see the benefits of having a a Karat bank account and card listed:

Instant savings – “Cash back rewards that scale with a your follower account.” Karat offers a number of different perks to its account holders but cash back rewards based on one’s social metrics is a key one.

Better terms – “We don’t charge you fees or interest.” The Karat Black Card is a charge card so the account holder has to pay his or her bill in full each month. Instead, Karat makes make money from ‘interchange revenue’, the fees that merchants pay for each transaction.

Custom Cards – “Metal cards branded with your own logo.” Online influencers and Karat customers like Nas Daily – 2.2m followers on Instagram – and TheRussianBadger – 2.86m followers on YouTube – are likely to have special metal cards with their own logo.

Instant Revenue – “We advance credit for sponsorship payments at zero cost.” ‘Credit’ feels like the key word here. Access to credit for online creators and influencers is the main problem that Karat sets out to solve. Says Eric Wei, Co-Funder at Karat in this TechCrunch piece: “Traditional banks care a lot about FICO [credit scores]. A lot of YouTubers, when they’re blowing up, they don’t have time to think: Let me sure my FICO is awesome as well.”

Source: Karat

How does Karat work? – At present, people can subscribe to Karat’s waiting list. In order to apply for the Karat card, influencers and creators submit their social media metrics and income information. Also, Karat’s website says that “We reward you as you spend and help you understand your finances. You’ll receive higher card limits, 2-5% cashback on categories you choose, waived interest fees, and other special perks including metal cards depending on your size.”

Main learning point: Will Karat take off and become the go-to card for all online influencers and creators? At which point will creator on YouTuber or TikTok decide to get credit from Karat and the other benefits it offers or will offer (think mortgages for instance)? With the likes of Shopify doubling down on influencers and the exploding proliferation of online creators, I can see the influencer ecosystem rocketing over the coming months, with startups like Karat vying to become an integral part of this ecosystem.

Related links for further learning:

https://www.wired.com/story/karat-influencer-credit-card-social-media-stats/

https://www.forbes.com/advisor/credit-cards/meet-karat-the-credit-card-for-social-media-influencers/

https://www.finextra.com/newsarticle/36111/karat-launches-credit-card-for-streamers-and-influencers

https://www.intercom.com/blog/podcasts/shop-making-a-habit-of-it/

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