CJ MacDonald, Step Co-Founder and CEO

San-Francisco-based Step, a new-age financial service company aimed at families and teens has announced today that it has closed a $22.5 Million in Series A funding for its all-in-one banking solution led by Stripe. Founded by financial industry veterans CJ MacDonald and Alexey Kalinichenko, Step integrates certain key features and benefits of checking, savings, credit and debit cards into one easy-to-use no-fee account.

The funding round was led by Stripe and saw participation from Will Smith’s Dreamers fund, Nas, Wndrco, Ronnie Lott, Matt Rutler, Kevin Gould, Noah and Jonah Goodhart as well as existing investors Crosslink Capital, Collaborative Fund and Sesame Ventures. The investment comes as Step’s waitlist demand exceeds 500,000 people since its offering was announced just a few months ago.

The company is also in partnership with Mastercard for its Step card aimed at becoming teen’s first spending card. Step’s bank accounts are securely held and FDIC insured through their sponsor bank, Evolve Bank and Trust. Evolve Bank and Trust, also enables easy ATM access for Step card holders at thousands of locations with no fees. Stripe provides issuing and processing technology that will help Step empower teens to fully participate in the economy while teaching financial literacy first-hand.

Step Co-Founder and CEO CJ MacDonald emphasised on the need to get Gen Z (the mid-1990s to mid-2000s as starting birth years) more equipped and educated when it comes to handling finances.

“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,” said Sherri Haymond, EVP Digital Partnerships, North America for Mastercard. “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.”

Step card will also be linked to the phone of the user and hence users can make use of services such as Apple Pay and Google Pay for various shopping and money transfer activities. Step benefits include parental oversight on their children’s spending as well as Deposits with interest on deposits at a current rate of 2.5% with round-up savings capabilities in an FDIC-insured account up to $250,000; access to a network of 35,000 ATMs nationwide with no hidden fees or ATM fees; controlled spending limit to help build credit along with fraud protection; and real-time budgeting tools as well as transaction and balance tracking.

The funding received in this round will go towards various project accelerations, new hires and respond to the strong demand for its services by the youth of today.

by Megha Bhattacharya
Market Analyst at IBS Intelligence