Zero, a startup building a new mobile banking experience with transformative functionality, economics and features, announced today that it raised a $2.5 million seed round led by ENIAC Ventures, with New Enterprise Associates, Nyca Partners, Lightbank, and Middleland Capital.
Launching to the public next year, the Zero mobile banking experience is powered by the Zero app and Zerocard, a revolutionary Visa card that acts like a debit card and earns credit card rewards. Zero will give customers banking with better cash rewards on purchases, higher interest on deposits, and none of the typical fees charged by traditional banks.
Zerocard acts like a debit card, where deposits and withdrawals appear in one place in the app with a real-time, net balance. Unlike debit cards, however, it processes on credit card networks, thus allowing users to earn a flat cash back rate on all spending regardless of category. Cash rewards are unlimited and automatically deposited into customer accounts on a monthly basis.
"Many people don't want to take on debt and don't have time to worry about multiple credit card statements, balances and due dates in the name of chasing down rewards, yet they still don't want to give up the opportunity to get cash back on their spending. Zero is the first modern banking experience to solve this," said Zero Founder & CEO, Bryce Galen.
Constructed of solid metal, Zerocard comes in four levels, which vary in terms of the rewards percentages they earn and the minimum annual spending required to qualify. The entry-level Zerocard Quartz earns 1.0%, Zerocard Graphite earns 1.5%, Zerocard Magnesium earns 2.0% and Zerocard Carbon earns 3.0% cash back. Higher rewards card levels will require $25k to $100k in annual spending to qualify, but Zero is waiving the minimum spending requirements for a limited time for people who sign up for early access at zerofinancial.com and successfully invite friends to also sign up.
Zero generates revenue from merchant processing costs rather than charging customers typical banking fees, and reshapes the cost structure in banking through reduced overhead such as brick and mortar locations and advertising. By taking a mobile-centric, referral-based approach to acquiring customers, Zero is able to provide not only better rewards on spending than traditional card-issuing banks, but also higher interest on deposits than leading savings accounts.
"For far too long, traditional banks have forced consumers to choose between the balance oversight of a debit card and the rewards of a credit card. We can do much better. We are challenging the status quo by creating something more transparent and more rewarding than ever previously possible," said Zero Founder & COO, Joel Washington.
Other Zero features include an Intelligent Advisor that forecasts customers' balances based on past trends, the ability to use the card with no ATM fees at more than 50,000 locations in Zero's preferred network, and the ability to block the card via the Zero app in case it's compromised. Customer support will be available via in-app live chat or over the phone. Deposits will be FDIC-insured, and Visa's Zero Liability Policy protects customers if their card is ever lost, stolen, or fraudulently used.
"It's very clear from observing consumer behavior that tracking spending on various cards and minimizing fees is hard to do. Zero is a very smart tool, making it super easy to manage, and solving a problem that costs consumers a lot of money. And the team understands how to build services that really work," said Hans Morris, managing director of Nyca Partners and former president of Visa, Inc.