FinTech Zero Raises $20 Million for Its Credit/Debit Hybrid Card

It looks like another FinTech firm is set to help change the way Millennials manage their money thanks to an injection of venture capital. As TechCrunch reports, this week Zero announced it had raised $20 million in Series A funding. This latest round was led by New Enterprise Associates and brings the company’s total equity and debt funding to $35 million.

Citing statistics showing Millennials’ apprehension about credit cards, Zero says it wanted to create a credit card that included rewards but also offered a debit-style experience. To accomplish this, the company married their Zerocard with a  Zero Checking account. As a result cardholders can view their card balances in the context of their budget to help prevent them from overspending. In fact, in order to earn their full cash back amount, cardholders will need to pay off their credit balance in full and on time each month. Moreover some Zero accounts also offer up to 1.75% annually on the average Current Position (calculated by subtracting a user’s Zerocard balance from their daily Zero Checkin balance).

Interestingly their emphasis on financial responsibility isn’t the only aspect of Zero that makes them unique. The company also allows cardholders to increase the amount of cash back they earn on purchases and the interest they earn on savings by referring friends. This tops out at 3% cash back plus 1.75% APY (on average Current Position.) when users reach the “Carbon” level by either successfully referring four people or spending upwards of $100,000 annually. While the idea of incentivizing referrals with better cash back rates is one that’s been suggested by the likes of Vital card, that offering does have a slightly different structure and has yet to debut.

Speaking to the idea behind the card, Zero co-founder and CEO Bryce Galen explained how traditional credit cards encourage consumers to spend more. Galen told TechCrunch, “People spend 10 to 15% more on average just because they’re putting it on a credit card, and not seeing where they stand all the time. Spending 10 to 15% more to chase 1 to 2% in rewards doesn’t make sense.” Meanwhile New Enterprise Associates partner Rick Yang said of his firm’s investment, “Zero is completely focused on their card programs and building a differentiated solution that actually provides a value proposition that resonates with consumers. We’ve also been fascinated by the growth of debit outpacing credit, and we think that our solution gives consumers the best of both worlds.”

According to Galen, the incoming capital will enable Zero to open the product up to those still on the company’s waitlist, which now tops 200,000 people. Although invitations haven’t started rolling out just yet, Galen says that should start within the next few weeks. Notably this rollout should happen just before the much-anticipated launch of Apple’s Apple Card, which also boasts unconventional features alongside financial health tools. Of course, other than that, both companies take very different approaches to disrupting the credit card industry. Ultimately it will be interesting to see which, if either model appeals most to Millennials/Gen Zers and does the most to benefit their finances.


Jonathan Dyer

I'm a small town guy living in Los Angeles looking to make solid financial decisions. I write for a number of finance websites, including HuffingtonPost and Business2Community. I founded in 2015 to focus on personal finance and the emerging FinTech markets.

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