While cash is going out of style for many adults, teenagers are underserved as payments become more cashless. TechCrunch reports that fintech startup Step plans to change that by meeting the needs of the 75 million children and young adults under the age of 21 in the U.S., that Step CEO CJ MacDonald calls the “pre-banked.”
“We’re building an all-in-one banking solution that primarily focuses on teens and parents,” he told TechCrunch. “We want it to be a teen’s first bank account. We want to be a teen’s first spending card. And we want to teach financial literacy and responsibility firsthand.”
Since founding Step last May with CTO and Square alum Alexey Kalinichenko
MacDonald, the company has raised $3.8 million in seed funding from Sesame Ventures, Crosslink Capital and Collaborative Fund, according to the outlet.
Differentiating Step from other mobile banking apps on the market is the company’s focus on teens, 13 and up, and other young adults with its messaging. They aim to prompt teens under 18 to ask their parents if they can sign up and not vice versa.
Their ambition is to be a comprehensive banking solution for this demographic, offering checking, savings and a Visa card that works as both credit and debit, says TechCrunch.
Features of the card include Visa’s Zero Liability Protection on all purchases from unauthorized use, as well as the option for parents to set spending limits.
“Schools do not teach kids about money. A lot of families don’t talk about money. And it’s a crucial life skill that’s not really addressed properly when people are growing up.”
Additionally, parents can connect their own bank accounts to Step to instantly transfer in funds to their children’s accounts. Backing by Evolve Bank means every Step account is FDIC-insured up to $250,000.
TechCrunch notes that unlike competitor Current, which charges a subscription, Step has plans to remain fee-free and instead generate revenue through interchange fees and lending once it has a deposit base, according to the outlet.
Ultimately, Step wants to help teach teens financial responsibility. “Schools do not teach kids about money. A lot of families don’t talk about money. And it’s a crucial life skill that’s not really addressed properly when people are growing up,” MacDonald to TechCrunch.