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Petal is a U.S.-based financial technology company headquartered in New York.
Petal offers a pair of no-annual-fee Visa credit cards, in partnership with WebBank,[1] along with a mobile app that enables consumers to manage their financial lives.[2]
Petal has said its products are designed to help people financially succeed,[3] in particular people who are new to credit or who have little credit history.[4]
History[edit]
Petal was founded in 2016 by entrepreneurs Jason Gross, Andrew Endicott, Jack Arenas and David Ehrich.[5]
Petal announced its first product, the Petal Visa card, in September 2017[6] and launched the card in October 2018.[7] In October 2020, Petal renamed its existing card “Petal 2” and introduced a second credit card, Petal 1. [8]
In May 2019, Petal introduced a rewards program that gives consumers higher cash-back percentages when they establish a track record for paying their bills on time.[9]
In September 2019, Petal announced that it had more than 50,000 cardholders,[10] two-thirds of which are millennial and Gen Z consumers.[11]
Petal has raised more than $100 million in venture capital funding.[12] In January 2018, Petal announced it had secured $13 million in Series A funding, an investment led by Valar Ventures.[13] In January 2019, Petal announced it had secured $30 million in Series B funding,[14] and in September 2020, announced a $55 million Series C round of financing.[15] In September 2019, Petal announced it had closed a $300 million debt facility from global investment bank Jefferies.[16]
Technology[edit]
Petal's platform uses machine learning to assess applicants’ creditworthiness, analyzing their full digital financial record (how much an individual makes, spends and saves, and the bills they pay) to determine how much credit each person can responsibly manage.[17]
This “cash flow” model leverages banking history to determine an applicant's creditworthiness. Where possible, Petal’s algorithms complement this cash flow data with credit bureau data on an applicant’s credit history. Utilizing alternative data in this manner enables Petal to make credit accessible to consumers even if they have a limited credit history.[18]
According to research released in July 2019 by the nonprofit FinRegLab, cash-flow data — the money flowing in and out of customer accounts every month — may be useful in predicting creditworthiness.[19] This study analyzed data from six nonbank lenders that use cash-flow data in their underwriting: Accion, Brigit, Kabbage, LendUp, Oportun and Petal.[20]
Several other financial technology and payments companies, including Square Inc., Stripe and Brex, use cash-flow data to inform underwriting decisions for small businesses. The Wall Street Journal has reported that JPMorgan Chase & Co., Bank America Corp., Wells Fargo & Co. and Citigroup Inc. "are seeking to augment credit reports and scores with real-time income or cash-flow data....to evaluate new loan applicants, specifically, those seeking credit cards and other loans that don’t typically require income documentation."[21]
- ^ Crosman, Penny (28 March 2018). "Petal, WebBank to launch card for 'credit invisibles'". American Banker. Retrieved 17 November 2020.
- ^ DeMatteo, Megan (13 November 2020). "Petal 1 Visa vs. Petal 2 Visa: Which is the best card for credit newbies?". CNBC. Retrieved 17 November 2020.
- ^ "Credit with a Conscience". Petal Card, Inc. 2 October 2018. Retrieved 17 November 2020.
- ^ Anzilotti, Eillie (2 February 2019). "This new credit card helps build a credit score for people who don't have one". Fast Company. Retrieved 17 November 2020.
- ^ Debter, Lauren (10 January 2018). "Petal Raises $13 Million To Give Starter Credit Cards To Millennials". Forbes. Retrieved 17 November 2020.
- ^ Carrns, Ann (8 September 2017). "New Credit Card Option for Those With Scant Credit Histories". The New York Times. Retrieved 17 November 2020.
- ^ Shieber, Jonathan (2 October 2018). "Petal's no-fee credit card for the credit score-less is now open to the public". TechCrunch. Retrieved 17 November 2020.
- ^ Kossman, Sienna (7 October 2020). "Petal Launches Secured Credit Card Alternative". The Balance. Retrieved 17 November 2020.
- ^ Weisbaum, Herb (22 May 2019). "GOOD CENTS No credit history? This new credit card pays cash-back rewards for on-time bill payments". NBC News. Retrieved 17 November 2020.
- ^ "Solving the New-to-Credit Problem". Petal Card. Petal Card, Inc.
- ^ Rooney, Kate (18 September 2019). "Credit card start-up Petal raises $300 million debt round from Jefferies". CNBC. Retrieved 17 November 2020.
- ^ Crichton, Danny (24 September 2020). "Valar triples down on Petal, leading $55M Series C round into the credit card disruptor". TechCrunch. Retrieved 17 November 2020.
- ^ Debter, Lauren (10 January 2018). "Petal Raises $13 Million To Give Starter Credit Cards To Millennials". Forbes. Retrieved 17 November 2020.
- ^ Crichton, Danny (29 January 2019). "Petal raises $30M from Valar to bank the unbanked with credit cards". TechCrunch. Retrieved 17 November 2020.
- ^ "Petal lands $55M to help increase access to credit". PitchBook. 25 September 2020. Retrieved 17 November 2020.
- ^ Webster, Karen (18 September 2019). "Credit Card Startup Petal Raises $300M Led By Jefferies". PYMNTS.com. Retrieved 17 November 2020.
- ^ Rossman, Ted (17 May 2019). "Petal card growing a following". CreditCards.com. Retrieved 17 November 2020.
- ^ Webster, Karen (4 April 2018). "Petal CEO: Using Cashflow — Not FICO — To Issue Credit Cards". PYMNTS.com. Retrieved 17 November 2020.
- ^ Crosman, Penny (25 July 2019). "Cash-flow data can predict creditworthiness, new study shows". American Banker. Retrieved 17 November 2020.
- ^ Koide, Melissa. "The Use of Cash-Flow Data in Underwriting Credit: Empirical Research Findings". FinRegLab. FinRegLab. Retrieved 17 November 2020.
- ^ Andriotis, AnnaMaria (18 October 2020). "Coronavirus Tanked the Economy. Then Credit Scores Went Up". The Wall Street Journal. Retrieved 17 November 2020.