After last week’s fall from the failure of Silicon Valley Bank, known as “Startup Bank”, another bank went bust, along with stocks of other banks. This raises questions about its potential impact, if any, on points and miles.
This is bad news for those who previously kept their money at SVB. Their third-party processors are no longer capable of processing payments, preventing banks and thus consumers from temporarily accepting payments and thus processing credit card transactions that are routed through the SVB.
This is certainly alarming and is a potential future case study of deregulation and lack of oversight for younger industries like startups and crypto. However, it is important to remember that most people do not process credit card transactions through the banks mentioned.
Sheila Bair, former president of the Federal Deposit Insurance Corporation, says New York Times that she doesn’t “think this is a problem for the big banks – that’s good news, they diversify.”
Credit card transactions, for most people, don’t happen through bankrupt banks. Most transactions for daily credit card users are still transferred through banks that are strictly regulated and protected by the US Federal Reserve System.
This is evidenced by the fact that shares of JPMorgan Chase & Co., Wells Fargo & Company and Citigroup Inc. flat on Friday after falling only slightly in the previous days, according to the New York Times.
The Times cites “stricter” capital requirements, “much wider deposit bases than banks like Silicon Valley, which don’t attract many retail customers” and as reasons for the approach. risk-averse approach to the assets in question, like cryptocurrencies.
There have been impacts to a few program points and miles enthusiasts may know:
plastic
Plastiq has temporarily suspended all payments to all US suppliers, plus several other countries, following the collapse of SVB. Since Plastiq relies on SVB to process payments, they no longer process payments. Looks like Plastiq is trying to make an agreement with another processor.
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As first reported by Regular MillerPlastiq users receive an error message when trying to schedule a payment:
We’re currently experiencing processing errors and are temporarily suspending payments to suppliers in the US and some other countries. We are working on this and hope to be able to process this payment again soon. For now, we recommend sending your payment via an alternative means.
Brex
After Plastiq’s hard stop, various stores, including CNBCrecorded portfolio companies on the advice of their venture capital firms to switch to an alternative payment processor called Brex to find a new home for “billions of dollars.” ” after withdrawing from SVB.
Brex is a Fintech startup, you guessed it, San Francisco, known in the points and miles world for offering a 110,000 point sign-in bonus to new small business checking accounts in 2021, according to the prize wallet.
Besides, Brex offers a free rewards card every year linked to the aforementioned checking accounts, offering 8 points per dollar for ride-hailing, 5 points per dollar for travel, and 4 points per dollar for dining out.
Unfortunately, in August 2022, Brex closed all small business accounts.
Brex has now significantly reduced the value of its reward points, specifically reducing cash and crypto exchanges to 0.6 cents per dollar of cashback instead of 1 cent per point value. .
The big (negative) news for points and miles enthusiasts is that Brex has reduced its Brex Rewards points transfer rate by over 40% to airline partners. Brex Rewards Points are no longer transferred to its seven airline partners at a 1:1 transfer rate. Now you need to transfer 1,670 Brex Rewards Points for 1,000 miles.
This means that Brex account holders must transfer an additional 67% of Brex Rewards Points to receive the same mileage while cutting cash and crypto by 0.6 cents each for an overall 40% discount on options. choose to redeem Brex Rewards points, as summarized by Bonus Wallet.
In the near future, you can get the best value for your Brex points by using them to the value of 1 cent per point for travel portal bookings and gift card redemption.
Brex card information has been independently collected by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.
bottom line
As of March 13, three banks in the startup space have been unable to stay afloat, the third is silver gateactually fell ahead of SVB on March 8, notably that its network allows for real-time cryptocurrency transfers.
As a result, the FDIC took control of SVB’s assets on Friday, marking the second-largest bank bankruptcy in US history and the largest since the 2008 global financial crisis.
“The U.S. banking system remains resilient and on solid footing, largely due to reforms implemented in the wake of the financial crisis to ensure better protections for the banking industry,” FDIC said. , the Federal Reserve and the Treasury Department said in a statement. Joint statement on March 12. “Those reforms combined with today’s actions demonstrate our commitment to taking the necessary steps to ensure that depositors’ savings remain safe.”
While the impact on points and miles has been minimal so far, you can’t use Plastiq right now for credit card transactions.
What is perhaps more concerning is the devaluation of Brex Rewards Points, which could set a precedent for future credit card point value reductions.
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