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petal

Petal Set To Flourish With $34 Million Funding As US FinTech Finally Blossoms

US FinTech company Petal, a 'new kind of credit card company built to help people financially succeed' has today raised $34 million in new funding from global investment bank Jefferies and Silicon Valley Bank.

This funding will support the public roll-out of the Petal Visa credit card that launched today.

The company also said that 100,000 people who had already joined a waiting list in 2018, who will (obviously) be the first holders of the card. This sounds like a big deal for US FinTech startups, currently struggling to keep up with those in Europe.

There are a number of reasons why. US tech behemoths such as Amazon, Facebook, Apple and Google tend to discourage new opposition. Their ongoing forays into real-time payment apps and mobile banking services are frightening in their possible scope.

It’s not only that. Europe has especially benefited from legislation for the customer.

When authorized by the customer, the Payment Services Directive 2 (PSD2) enables the sharing of user (banking) data with other parties and here’s also the controversial General Data Protection Regulation (GDPR) that allows EU citizens to control their personal data; both initiatives mean a more transparent environment for consumers, banks and FinTech startups alike.

No surprise then that European FinTechs such as Monzo, Revolut, Transferwise, iZettle, Curve and many others have soared ahead in customer acquisition.

Now it may be time for the US FinTech revolution to finally accelerate with Petal, a credit card company that has recruited a team from the likes of  Google, Amazon, Square, WeWork, CitiBank, Capital One, American Express and Chase.

Petal may finally be the US FinTech product that hits critical mass.PETAL

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Petal says its product has been ‘established to help people build credit, not debt, by providing a credit card with no fees no financial traps and no prior experience with credit required’.

That doesn’t sound particularly revolutionary when compared to the European companies previously cited, but in an American banking culture with ten millions of Americans without a credit score, it could be a very big deal.

According to Business Insider, bad credit can cost as much as $250,000 over the course of an American’s lifetime in fees, interest and other charges. At the same time, the credit card industry rakes in $50 billion in fees each year.

Petal is a Visa credit card with high limits and low rates that people can qualify for even if a potential customer has never used credit before. The company sees the money its clients make and the bills they already pay to see if they qualify instantly.

Its ‘radically simplified’ user interface and mobile app makes it easy to manage money, track spending and build credit without thinking about it.

Speaking from London, Sarah Kocianski, Principal Research Analyst, 11:FS Research and Benchmarking thinks Petal has great ambition, but will need to focus on user behavior to become a success. 11:FS was listed in this week's LinkedIn Top Startups 2018, so her words have gravity.

Petal's ambition to provide simple and transparent credit products to those unserved by existing credit card providers is admirable.

That said, its success will depend on providing quality education for its customers around how to build healthy financial behaviours and support to help them achieve that end.

While Petal's strategy to bring America's 'uncredited' citizens may sound very familiar to the increasing numbers of people signing up for European FinTech, the potential growth of Petal in its American garden may be a game-changer.

Time will tell if it blooms or wilts, but $34 million is a decent round of funding to start planting.

I have 15 years' experience in the mobile, web and digital sectors. I write for The Economist, MIT Tech Review, Mashable, TechCrunch and Wired UK, and I have a weekly column for UK broadsheet The Telegraph. I speak on the BBC World Service and am a sought-after speaker aroun...

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Let's carry on the conversation over at my Google News-verified blog Mob76 Outlook or on Twitter - @montymunford

Petal Raises $34 Million, Publicly Launches Credit Card

Mobile-first credit card company Petal has raised $34 million in credit. The round was led by Jefferies and Silicon Valley Bank.

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This is Petal’s third funding round. Most recently, the company raised $13 million in January 2018. Previous investors in the company include Valar VenturesGreat Oaks Venture CapitalRiverPark Ventures and others. The round brings Petal’s total known funding to about $50 million, according to the company.

Founded in 2016, Petal aims to make financial services more accessible. Petal co-founder and CEO Jason Gross told Crunchbase News a close friend who had moved to the U.S. was unable to achieve basic financial goals— qualifying for a credit card, securing a lease, and getting a cell phone plan—due to his lack of a credit history in the U.S. His friend’s experience motivated Gross to start Petal.

“One of the major financial regulators also started to publish research about access to credit,” Gross explained. “They found that a tremendous number of people in the United States are excluded from the credit system […] because they haven’t yet had the opportunity to build credit.”

With that in mind, the mobile-first startup offers a no-fee credit card. Its approval process differs significantly from other providers, not taking into consideration a lack of past credit history. While the company doesn’t discount an applicant because of a lack of credit, credit history does carry weight in the process.

“We want to approve as many people as possible, but today we’re really built more for people that are new to credit and just establishing credit,” Gross said. “Chances are much higher that you will be approved if you haven’t had missed payments or bankruptcy.”

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According to the company, its annual percentage rate is up to 50 percent lower than other entry-level credit cards, and Gross told Crunchbase News that the average credit limit for approved individuals is 10 times higher than that of bigger banks.

In addition to its credit card service, the mobile Petal platform gives its card holders insights into their payment history and habits. For example, the company sends individuals reminders and helps them assess how much interest will be paid based on the payment plan the individual has set in place.

The company, which was previously in beta, is officially launching the card publicly today. Gross told Crunchbase News that during its beta 100,000 individuals signed up to be notified of the launch. Gross also said that while debit and banking is an important aspect of financial services, Petal will be focused on credit for the foreseeable future.

“While 9 percent of the U.S. population doesn’t have a bank account, more than 50 percent of the US population has limited access to credit because they have a low or no credit score,” Gross explained. “And that’s the problem that we’re focused on solving today.”

With the round, Petal plans to increase its headcount from 50 to over 100 within the next year. It is focused on acquiring customers, launching its Android app, and building out features, including a rewards program, in the future.

iStock Photo / vladwel

Editorial Update: A previous version of this article stated the funding was Series B. It has since been updated.