NEW YORK (Reuters) - Stash, a New York-based startup that allows consumers to save small sums of money and make micro-investments through its mobile app, has raised $65 million in funding, it said on Tuesday.
The funding round was provided by existing investors, including Union Square Ventures and Breyer Capital, and led by a private institutional investor, the company said. It did not disclose the name of the private institutional investor.
Stash, which also offers a debit account service connected to a card, said it had launched a new rewards program through which users can receive fractional shares of stock of companies when they make certain purchases.
Customers using Stash’s debit card to shop on Amazon.com Inc or buy food at Chipotle, for example, will receive a fraction of each company’s publicly traded stock. For purchases at private companies, such as local stores or restaurants, customers will earn “stock-back” in an exchange traded fund.
The share purchases will be funded by Stash, which will make money through debit card interchange fees, Ed Robinson, co-founder and president of Stash, said in an interview. The program had been previously tested with a restricted number of customers.
“During the testing period, we saw an overwhelmingly positive response from users as they pay ordinary bills like Netflix, and in return received Netflix stock as well as access to dividends, educational resources and financial advice,” Robinson said in a statement.
Like Stash, other financial technology companies have been expanding their offering to include banking-like services. Many are seeking to lure customers through rewards or by paying higher interest.
Student lender SocialFinance offers a checking account with a 2.25 percent interest rate, while digital wealth management startup Wealthfront last month launched a cash account with a rate of 2.24 percent.
Stash’s banking services are offered in partnership with Green Dot Corporation and its subsidiary Green Dot Bank, which means the debit accounts are protected by the Federal Deposit Insurance Corporation.
Reporting by Anna Irrera; editing by Diane Craft