CompoSecure On The Lures Of Heavy Metal Payment Cards – And SPAC Mergers

As economies reopen, businesses hire and the worst of the pandemic seems to be behind us, consumers are getting ready to resume spending – on their cards. 

In an interview with PYMNTS, Jon Wilk, CEO of CompoSecure, which designs and manufactures cards, said he anticipates that metal payment cards will see greater usage, particularly in touchless, face-to-face transactions, as consumer spending picks up after more than a year of pent-up demand.

The conversation came against the backdrop where CompoSecure said this month that it would go public through a special purpose acquisition company (SPAC) merger with Roman DBDR Tech Acquisition Corp. The transaction values CompoSecure at $1.2 billion, on a net revenue base of $261 million as measured last year.  

“The reason the SPAC route made sense for us,” according to Wilk, “is because in a SPAC transaction, you are able to tell the story not just of where you’ve been, but of where you’re going” with projections and forward-looking commentary. 

Premium cards are a status symbol, tied to high credit lines and high-level rewards programs. The move to contactless is impacting the metal card sector in positive ways. In a release detailing the SPAC transaction, the firms said that there are more than 22 million premium metal cards slated to be issued across hundreds of card programs worldwide. 

Tapping Into Tap To Pay’s Growth 

At a high level, he said, “we’re continuing to see the evolution of tap to pay for cards.” That particular functionality is likely to be around for a long time, he said, as tap to pay and, more generally, contactless payments are easier than using phones for transactions. 

Those cards have evolved, he said. The cards started by targeting the affluent, high net worth space. “Now they’ve been embraced by the mass affluent space,” said Wilk, specifically at the upper end of that market. The total addressable market has seen barely any penetration by metal cards, said Wilk, as there are billions of payment cards produced every year, and CompoSecure’s niche is less than 1 percent penetration into that market. 

CompoSecure’s research hints at the greenfield opportunity: Responses across more than 18,000 consumers surveyed by the firm revealed that metal cards are a competitive differentiator for most consumers — 58 percent of them. Roughly half of consumers said they would leave their bank for another if offered a metal payment card. Approximately 59 percent of millennials and 64 percent of wealthy consumers have a greater inclination to leave their bank for one that provides a metal card, according to CompoSecure’s findings. 

Perhaps the most telling piece of data shows that getting the metal cards into younger users’ hands may lead to long-lived relationships: 73 percent among millennials (ages 25 – 34) across all the regions, and particularly in the U.S., where 77 percent of this demographic said they prefer metal cards, according to the survey. 

“There’s still a long way to go for us, we believe, both domestically and internationally,” he told PYMNTS. New advancements in technology will enable cards to feature biometric controls or dynamic CVV, which changes over time. “We’re staying somewhat agnostic, where we have metal card versions of both,” he said. 

The continued rollout and evolution of tap to pay will offer a tailwind to the continued embrace of rewards, or additional subscription benefits, to incentivize consumers to use the cards more frequently.  

One additional development that could boost usage of those higher-end cards: Cryptocurrencies are increasingly going mainstream, and offering crypto as a payment option may lead to heavier use of payment cards. 

In terms of the new products and offerings to be launched in the coming months, Wilk pointed to Arculus, a cryptocurrency cold storage product set to debut in the third quarter of this year. 

With a nod toward Arculus, he said a three-factor authentication solution would exist as “a card form factor where your keys are stored on a secure element on your card” rather than having the exchange hold the user’s private key (which is relatively less secure). 

“We’ve also developed a solution, which we believe is as easy as one-click checkout,” for transacting with crypto and cold storage,” Wilk told PYMNTS.