Robinhood is acquiring X1 Inc., a fintech company that offers credit cards, for $95 million in cash. The acquisition, which is expected to close in the third quarter, would enable the financial services firm to offer its customers access to credit cards.

Besides that, Robinhood said it would be bringing the X1 team on board. X1's Co-Founders Deepak Rao and Siddharth Batra will oversee the new business, the company noted today (Thursday) in a statement shared with Finance Magnates. Rao will also serve as the General Manager for Credit Cards and report to Vlad Tenev, the CEO and Co-Founder of Robinhood.

Robinhood Looks Beyond Trading

"This acquisition will bring us closer towards our goal of serving the entirety of our customers' critical financial needs," Tenev commented. "Together with X1, Robinhood will now be able to offer our customers access to credit."

The California-based firm announced that it is seeking to broaden its product offerings and strengthen its relationships with existing customers. X1's credit cards have no annual fees, late fees, or foreign transaction fees, according to the statement.

"When founding X1, we set out to create a different kind of credit card with an unparalleled experience for customers, similar to Robinhood's mission to make our financial markets more accessible to all," Rao said, lauding the deal. "We share the same ethos and joining together with Robinhood, we'll be able to offer an enhanced credit card experience."

Declining User Demand

Robinhood's acquisition of X1 comes at a time the broker is witnessing a declining number of monthly active users (MAU) due to a slowdown in the equities market and the interest rates hiking. The firm's MAU dropped from 11.5 million to 10.6 million in May. Compared to the same period last year, the figure dropped even further, declining 28% from 14.6 million.

Moreover, Robinhood announced early this month that it was delisting the commonly traded cryptocurrencies native to Cardano, Solana, and Polygon blockchains. This was after the digital assets were identified as securities by the US Securities and Exchange Commission (SEC) in its lawsuits against Coinbase and Binance.

Cautious about the SEC's heightened enforcement actions, especially against digital assets platforms, earlier Robinhood told Congress it was reviewing its listed digital assets. The financial services platform is known for offering commission-free stock trading services and more than a dozen cryptocurrencies.