For many people, debit cards are the preferred method of payment. They’re easy to use and offer a convenient way to keep track of expenses. However, they are not without their drawbacks. For one thing, they can be easy to lose or misplace. Additionally, if they are stolen, they can be used to make unauthorized charges. Finally, some banks charge fees for using a debit card. For these reasons, many people are looking for alternatives to debit cards.
There is another alternative debit card about to launch, this one from a company called Zero. And they have over $8 million from a recent funding round to help get the product up and running. The details are a little light, but as Tech Crunch reported, it is actually a credit card that pays balances off with an associated checking account:
A startup called Zero thinks it has a solution to this and it is gearing up to launch a credit card that functions like a debit card. The startup is also raising $8.5 million in a funding round led by ENIAC Ventures, including participation from NEA, Lightbank and others.
With the Zerocard, “you don’t have to worry about going and paying or bill-tracking that on a regular basis,” said founder and CEO Bryce Galen. The company is offering an app that updates in real-time with deposits, purchases, transfers and the net balance available for viewing right away. There’s “no risk of getting into long-term debt because you always know that you’ve got the money you’re spending.”
Yet it also will have the perks of a credit card. Because Zerocard processes on credit card networks, it makes it easier to pay customers a consistent cash back rate between one and three percent, for all purchases.
Although it’s not clear what the adoption will be for this kind of product, but it is one more example of ways that organizations are looking to encroach on debit’s territory.
Overview by Sarah Grotta, Director, Debit Advisory Service at Mercator Advisory Group
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