Robin Hood has announced a new debit card branded as a Robin Hood cash card. This card is linked to a spending account separate from your securities account and can be used for ATM withdrawals as well as face-to-face and online payments. The new card replaces Robin Hood’s current cash management debit card, originally announced in 2019.
A major new feature of the card is the option for users to automatically invest in assets such as stocks and cryptocurrencies when spending money. Robin Hood rounds up transactions made with the card to the nearest dollar and uses that extra money to buy the asset of the user’s choice. So if you spend $ 10.55 on a brito bowl with your cash card, Robin Hood rounds up your payment to $ 11 and spends an additional $ 0.45 to buy Dogecoin or Ethereum (if needed).
Similar “spare change” investment capabilities are already provided by companies such as Acorns.com and Stash.com.
Robin Hood provides additional funding to users based on a “variable reward algorithm”
To encourage the use of this feature, Robin Hood will give people an additional 10 to 100 percent of the weekly rounding up (up to $ 10 per week). In an interview with The Verge’s Decoder podcast, Robinhood’s Chief Product Officer, Aparna Chennapragada, said the exact numbers provided by the company are determined by a “variable reward algorithm.”
The round-up feature “motivates people to do better, again,” Chennapragada said. [money] You can invest in cash, cryptocurrencies, stocks, expenses and more. “
Chennapragada does not say whether it provides users with insights on how the reward algorithm works and may turn out to be a slightly controversial feature. Random reward mechanisms are often criticized for being addictive. For example, encourage users to continue playing in casinos and video games. And while giving a few dollars to a user isn’t dangerous in itself, it’s a risky and volatile market investment for Robin Hood critics (who say the company encourages dangerous trading habits). It may be another example of a company that gamifies.
The main function of the card is automatic investment based on rounded up payments.Image: Robin Hood
Other features of Robin Hood’s new debit card include unspecified “rewards and additional cashback” at certain stores (Robin Hood states that these include H & M, Chevron and Chipotle. However, it does not say when or how much savings will be available). You also have the option of users sending salaries directly to their account via a deposit, accessing the funds “up to 2 days in advance” and automatically investing a portion of that deposit in the selected asset.
There are no subscription fees, minimum account fees, overdraft fees, or in-network ATM fees on the card. The network Robinhood uses for debit cards is not clear, but previous Cash Management cards used Mastercard.
Chennapragada told Decoder that he would like to renew his debit card instead of selling his credit card, especially because of the changing consumer habits among young Gen Z consumers.
“More young people are debit primary. First of all, you can see if their credit scores aren’t accumulating or at credit card companies how they can get stuck. Cash flow, “says Chennapragada. “So why shouldn’t we give debit and cash cards the same kind of rewards? Plus, we’re actually looking at investments.” Any of these products today you can do. there is no. “