Petal Raises $140M Series D Toward Credit Building for the Underserved

Credit card company Petal, which was created to help people build credit and spend frugally, has raised $140 million in a Series D round led by Tarsadia Investments.

Jason Gross, co-founder and CEO, announced the news in a Medium post Wednesday (Jan. 5), adding that 2021 was “a breakout year” for the company.

“At a time when consumers faced unprecedented barriers to accessing credit, we bucked the trend — using our unique technology to expand access like never before,” Gross said in the post.

Petal helps build credit through providing Visa cards, and users are able to qualify for the cards even if they’ve never used credit. Petal’s technology analyzes banking history and measures creditworthiness based on income, spending and savings.

By measuring credit through cash flows and other things not usually considered by a credit application, Petal helps more people qualify, particularly in the pandemic’s strenuous economy. The post notes that Petal has strived to reach underserved customers, with many members having “thin or no credit history” when they first applied for a card.

The press release says Petal has tripled its user base in the last year and seen its monthly revenue quadruple.

Petal also recently debuted the business-to-business (B2B) enterprise service Prism Data, which makes use of the company’s CashScore credit scoring program, translating raw transaction data into usable insights and scores.

Gross said the company has “big plans” for this year, including with the hiring of Erin Allard as general manager of Prism Data. Gross described her as “passionate about building a more fair and inclusive financial system.”

PYMNTS reports that Petal says behavioral analytics is a solid way to address issues of customer security and onboarding.

See also: Petal on Reducing Fraud and Mitigating Onboarding Friction Through Behavioral Analytics

Chief Risk Officer Manik Chawla said behavioral analytics helps to “improve our product decisions in terms of identifying fraudsters, but it [also] helps us reduce the friction for the worthy borrowers.”

Fraud has emerged as the biggest obstacle in customer onboarding. Chawla said that bad actors often have several tactics to pose as real customers. Then, they open accounts to do things like money laundering or theft, stealing identities and composing new ones in a practice called synthetic identity fraud.