Empower Secures Purchase of Petal in the Credit Fintech Sector

Empower Finance has revealed its plans to acquire the US-based credit card fintech Petal, which offers alternative financial products and credit underwriting for underserved users in Mexico and the US. This acquisition is anticipated to close later this quarter.

Petal offers individuals access to Visa credit without any credit history, through cash flow underwriting, allowing users to utilize their Open Banking to be eligible for credit and set up a credit history.

Petal Seeks To Address The Issue Of Credit Inequity

Since 2018, approximately 400,000 users have been accepted for the Petal credit card, which is distributed by WebBank, most of which have ‘thin’ or no credit files at approval.

In August last year, Petal secured a new term loan facility for up to $20 million of incremental commitments with Trinity Capital. This came after closing a $200 million debt facility from Victory Park Capital. It’s also raised extra equity funding from current investors.

Petal’s Co-founder, Jason Rosen, emphasizes the significant importance of this merger, as it brings together two of the top innovators in this field. He also added that by merging the platform products offering, goal reach, technical capabilities, and financial strength the platform is poised to move faster to close the credit equity gap.

Rosen further stated that a significant number of consumers in the US and globally lack access to safe and affordable credit. He believes that leveraging new technology and modern product design such as cash flow underwriting can radically enhance credit access around the globe.

Empower Aims To Position Itself As A Leading Innovator In The Financial Services Sector

Empower has also concluded the purchase of Cahalo, a lending and consumer credit firm located in the Philippines.

Both Cahalo and Petal will merge into Empower, granting it strategic positions in the US credit card category and the Southeast Asian credit market, respectively.

Established in 2016, Empower underwrites individuals using other non-traditional data, machine learning, and real-time cash flow to access credit risk, unlike traditional lenders that rely on credit agency reports. With two million active subscribers, Empower became profitable in 2022.

Warren Hogarth, the Co-founder and Chief Executive Officer of Empower highlighted the shared dedication of both companies to leveraging technology and rich alternative data to open up financial opportunities for more individuals who meet their consideration

Hogarth expressed confidence that merging Cashalo and Petal and into Empower would bring fresh product, operational, and analytical capabilities to address issues on the credit insecurity that many individuals around the globe struggle with.