Rakuten Applying For US Banking Charter

A Japanese FinTech company is applying for a banking charter in the United States, according to a report by American Banker.

The eCommerce firm Rakuten currently runs a shopper rewards program in the States, and said would file the necessary paperwork on Friday (July 26) with Federal Deposit Insurance Corp. (FDIC) and the state of Utah for an industrial loan company (ILC) charter.

Rakuten has about 13 million active users who earn rewards for purchasing products from participating merchants.

The bank would be headquartered in Utah and could handle users’ deposits, according to Lee Carter, Rakuten head of banking and potential ILC CEO. The company also wants to give members a credit card to make purchases in the future and also earn rewards.

“We want to have a fair opportunity to serve our clients,” Carter said. “And we want the opportunity to provide additional financial services to them.”

Rakuten is one of a number of FinTechs looking to enter in the banking sector with an ILC charter. Walmart recently attempted to get one right before the financial crisis froze approvals for them.

ILCs can sidestep banking company holding requirements while still getting FDIC guarantees on deposits, which means that retail firms can have them. Some experts call the charter a loophole, and other banks have actively opposed the charters, saying it crosses a line between commerce and banking.

Recently, payments giant Square applied for an ILC, then pulled its bid, then re-submitted in December.

Many in the industry are watching Square’s application. The analytic consensus is that fintechs might have an advantage over failed bids from companies like Walmart and Home Depot.

Carter said he’s “kept a close eye on Square’s application.”

He also said the company would provide a complete plan for the Community Reinvestment Act with the application, because some groups are worried that FinTechs won’t be held accountable for certain rules.

“We have thought about that very, very carefully,” Carter said. “We’ll have specific goals for community service and investments back into the community.”



New forms of alternative credit and point-of-sale (POS) lending options like ‘buy now, pay later’ (BNPL) leverage the growing influence of payments choice on customer loyalty. Nearly 60 percent of consumers say such digital options now influence where and how they shop—especially touchless payments and robust, well-crafted ecommerce checkouts—so, merchants have a clear mandate: understand what has changed and adjust accordingly. Join PYMNTS CEO Karen Webster together with PayPal’s Greg Lisiewski, BigCommerce’s Mark Rosales, and Adore Me’s Camille Kress as they spotlight key findings from the new PYMNTS-PayPal study, “How We Shop” and map out faster, better pathways to a stronger recovery.