The investing app Robinhood just launched a new debit card that will let users round up their purchases and invest the change. Because if you’re going to rack up a bill going shopping, it helps to put a few cents away for a rainy day.
The whole business strategy relies on the fact that people are going out shopping more, so they end up investing like this more often (which brings in even more dough for Robinhood).
Robinhood isn’t the first company to have this idea, though. In fact, two other companies in the space, Acorns and Stash, are both private companies and were both valued at over US$1 billion.
Key comments:
“The next generation has a high interest in investing, but it is out of reach for many because they’re caught up in the cycle of spending,” Robinhood Chief Product Officer Aparna Chennapragada said. “And so we built this spending account and a cash card … to be able to turn spending into investing.”
“When we do the user research, we see a debit [card] primary [users], young, next generation of customers who are interested in investing and curious about crypto, but they’re not going to spend day and night memorizing hexadecimal incantations, and I think for them crypto is still inaccessible,” added Chennapragada.
“Nobody really asks the question of, ‘Is it too easy to buy a flat screen TV with one click and get it delivered?’ But people are now asking the question of ‘Should it be this easy and low friction for people to invest in the markets?’” Robinhood’s CEO Vlad Tenev argued in late 2020.
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