Challenger bank Point has raised a $46.5 million Series B funding round. The company offers an account associated with a debit card. And the startup positions itself as a premium debit card company and tries to offer credit card rewards with debit cards.
Existing investor Peter Thiel's Valar Ventures is investing more money in the company and leading the Series B round. Other investors include Breyer Capital, YC Continuity and Human Capital. The company raised a $10.5 million Series A round 18 months ago and a seed round before that, which means that Point has raised $60 million in total.
Point wants to build the anti-credit card. The company tries to keep what’s best about credit cards but leave behind what’s not so good. Many people think credit cards are a slippery slope. If you spend too much money without realizing that you’re not going to be able to make ends meet, you’ll pay interests. Those interests can even make it harder to pay back your credit card debt.
That’s why credit card incentives are both attractive and scary. If you have enough savings or if you earn a lot of money, paying your credit card bill is not going to be an issue. But that’s not always the case.
Point tells you that you should ditch your credit card altogether. When you open a Point account, you can top it up with another debit card or set up direct deposits with your employer. Opening a Point account currently costs $49 per year. You get two free ATM withdrawals per month and you don’t pay any foreign transaction fees.
After that, you can safely spend money with your Point card. You know that you have enough money to pay for your purchases as it’s a debit card. Every time you want to buy something expensive, you have to top up your account first.
Point users earn points with every purchase. You get 5x points on subscriptions, such as Spotify and Netflix, 3x points on food deliveries and ride sharing, and 1x points on everything else. If you pay with your Point card, you also get trip cancellation insurance, car rental insurance, global travel assistance, phone insurance and new purchase insurance.
You can control the Point card from the Point app — you can lock it and unlock it whenever you want and you can choose to receive notifications whenever you want. The Point debit card also works with Apple Pay and Google Pay.
With today’s funding round, the company plans to hire more people, launch new features and introduce new products. In other words, don’t expect any major changes. But the company now has more money to expand more rapidly.