How Step Prepares Teens For Financial Literacy

By Noah Long ● Jun 17, 2019
  • Step, a company that helps teenagers with financial literacy, announced recently that it closed $22.5 million in Series A funding
  • This round of funding was led by Stripe
  • Will Smith’s Dreamers fund, Nas, Wndrco, Ronnie Lott, Matt Rutler, Kevin Gould, Noah Goodhart, and Jonah Goodhart also joined this round along with existing investors Crosslink Capital, Collaborative Fund, and Sesame Ventures.

Step — a company that founded by financial industry veterans CJ MacDonald and Alexey Kalinichenko — has built a card that is linked to a mobile app that enables users to send and receive money instantly, shop online or in-store, and utilize digital wallet platforms like Apple Pay and Google Pay.

And Step is also partnered with industry leaders like Mastercard, Stripe, and Evolve for powering the first-of-its-kind and all-in-one banking solution for the next generation. The waitlist demand exceeded 500,000 people in under three months.

Recently, Step announced that it closed a $22.5 million Series A funding round led by Stripe. Will Smith’s Dreamers fund, Nas, Wndrco, Ronnie Lott, Matt Rutler, Kevin Gould, Noah Goodhart and Jonah Goodhart also joined this round along with existing investors Crosslink Capital, Collaborative Fund, and Sesame Ventures.

Step partnered with Mastercard, Stripe, and Evolve on the all-in-one solution and the company wants to be a teen’s first spending card and first bank account. The card is co-branded with Mastercard (Zero Liability Protection against unauthorized purchases or charges) and the company’s bank accounts are securely held and FDIC insured through their sponsor bank Evolve Bank and Trust.

“Teens and parents are ready for a seamless mobile banking experience, one meticulously designed for their needs,” said Step co-founder and CEO CJ MacDonald in a statement. “We’ve partnered with the best in the business to create the right solutions for the next generation. As we move into a cashless era where digital content and transactions fuel our daily lives, the need for innovation in financial services increases. We want Gen Z to be more equipped and educated when it comes to money.”

The Step card is also integrated with a fee-free interest-bearing deposit account. Plus Step customers are not required to have a minimum balance and they are not charged any hidden or overdraft fees. Plus the Step offering also allows parents to gain insights into their teen’s spending, which provides them with the opportunity to set limits and guidelines.

“Today’s young people are digitally savvy, having grown up with technology as a mainstay in their day-to-day lives. As a result, we also need to ensure that they become familiar with the unique aspects of digital payments including providing education about the various finance and payment products available,” added Mastercard’s EVP of Digital Partnerships – North America Sherri Haymond. “Step has taken a thoughtful approach to developing an offering for teens and families that provides that first step in educating and acclimating today’s youth to help them gain confidence and awareness around their finances.”

The additional Step benefits include industry-leading interest on deposits at a current rate of 2.5% with round-up savings capabilities in an FDIC-insured account up to $250,000. There is access to a network of 35,000 ATMs nationwide with no hidden fees or ATM fees. And there are controlled spending limits, which helps build credit and fraud protection.

“Stripe is committed to searching for new ways to remove barriers to commerce and broaden economic access to more people,” explained Stripe’s head of corporate development Jordan Angelos — who is joining Step’s board. “Step will help teenagers responsibly participate in a financial system that’s moving online and teach money management skills through direct experience. We’re thrilled to support its efforts.”

With this funding round, Step is planning to accelerate its roadmap, add new hires, and respond to the strong demand for its services. The excitement for the product is driven by people becoming far less dependent on cash as they shop online and order services from mobile devices or repay friends and family.

“We knew from the first meeting with CJ that Step was creating something special and filling a real void in the market,” noted Crosslink Capital general partner Eric Chin. “We expected this team to move forward at an impressive clip, but Step has exceeded our expectations. We have not seen such explosion from a consumer launch and are excited for millions of Americans to experience the product.”

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