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
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...