Fidel API, a start-up introducing the concept of “programmable money” to the management of card-linked loyalty programmes, revealed widening losses with its 2022 annual results.
Card-linked loyalty has been around for some years but is a notoriously difficult market in which to achieve the scale needed for profitability. Bink, a high-profile start-up which boasts both Barclays and Lloyds banks as shareholders has accumulated losses of £67m in eight years. Only London-based Reward Insight is making money. Its most recent accounts showed a profit of £2.6m on turnover of £43m.
Fidel is controlled by Subatra Dev, its founder. Most card-linked propositions are aimed at marketing directors but Fidel API is targeting developers by offering direct API access to transaction data from Visa, Mastercard and American Express.
Customers include Avios, which uses Fidel to integrate card-linked offers with Aer Lingus’s loyalty platform and Perkbox which matches card transaction data to automatically deliver discounts and offers from participating merchants. Perkbox says that Fidel API’s product is helpful when it comes to reporting on which offers are redeemed where.
Despite its high-profile clients, Fidel’s business performance in 2022 was modest. Turnover grew 19% to $3.59m, mainly due to “higher non-recurring platform revenues from a key customer.” Despite a push in North America, three quarters of sales are in the UK.
Operating losses widened from $11.4m to $21.8m driven by “continued investment… in people, technology and operations.” Employee expenses almost doubled to $14m with an average of 103 staff during 2022 costing $135K each.
Fidel API raised $44m in 2022 from a blue-chip investor rosta including Bain Capital and exited the year with $27m cash in the bank. Card-linking sounds wonderful on paper but, in practice, is a very tough market. The developer friendly approach is novel but management will need to work hard to deliver a return to its investors.
