Empower to acquire Petal

Financial technology company Empower is acquiring New York-based Petal , a consumer credit card and financial technology company. Empower also announced it completed its acquisition of Cashalo , a consumer credit and lending company headquartered in the Philippines. The combined companies will fold into Empower.

Empower underwrites individuals using real-time cash flow, other nontraditional data, and machine learning to assess financial responsibility and credit risk differently than mainstream lenders, which rely primarily on credit agency reporting. According to the press release, the company offers lines of credit, which are issued by FinWise Bank, Member FDIC, and no-interest advances to 3 in 4 consumers who would otherwise have minimal access to liquidity. Founded in 2016, Empower has 2 million active subscribers.

“In both companies, we found a shared commitment to harnessing technology and rich alternative data to unlock financial opportunity for more people who merit our consideration. I’m confident that by merging Petal and Cashalo into Empower, we amass new product, operational, and analytical capabilities to help alleviate the credit insecurity that billions of people around the world struggle with.” – Warren Hogarth, Co-Founder and CEO of Empower (and former Partner at Sequoia Capital).

Petal pioneered access to high-quality Visa® credit cards that don’t require a credit score to qualify, via cash flow underwriting, enabling individuals to use their open banking data to qualify for credit and establish a credit history. This technology makes credit more accessible to millions of U.S. consumers without credit histories, or for whom traditional credit scores do not tell the whole story. Since 2018, nearly 400,000 consumers have been approved for the Petal credit card, which is issued by WebBank; the majority of those consumers had thin or no credit files at the time they were approved.

“Safe, affordable credit is unavailable to tens of millions of consumers in the U.S. and billions worldwide. We believe that modern product design and new technologies like cash flow underwriting can be used to radically improve credit access around the world. This merger brings together two of the leading innovators in this arena. Our combined product offerings, financial strength, technical capabilities, and global reach will allow us to move much faster to close the equity gap in credit.” – Jason Rosen, Petal’s Co-Founder.

Empower’s acquisition of Petal is expected to close later this quarter.