- Empower announced plans to acquire Petal for an undisclosed amount.
- The deal will help Empower expand into the credit card market.
- Empower also announced it closed the acquisition of Philippines-based consumer credit and lending fintech Cashalo.
Empower, a fintech helping to extend credit to underserved consumers, announced plans to acquire underserved credit card provider Petal. Financial terms of the deal, which is expected to close later this quarter, were not disclosed.
New York-based Petal was founded in 2018 to offer underserved consumers access to credit cards. To better help marginalized consumers access the credit they need, the company doesn’t require them to have a credit score to qualify for the card. Instead, Petal leverages users’ open banking data as underwriting data to offer them credit and help them establish a credit history. Empower anticipates integrating Petal’s technology into its own will help it broaden into the U.S credit card market.
“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,” said Petal Co-founder Jason Rosen. “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.”
The news comes after Petal has been struggling with high interest rates as the cost of borrowing has increased. By June of last year, Petal had cut 20% of its staff and, though it raised $240 million in combined debt and equity funding in August, by November, rumors swirled that Petal would become insolvent if it did not find a buyer quickly.
As part of today’s news, Empower also announced it completed its acquisition of Cashalo, a Philippines-based consumer credit and lending fintech. Empower plans to combine both companies under the Empower name.
“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,” said Empower Co-founder and CEO Warren Hogarth. “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.”
Empower was founded in 2016 and uses its technology to underwrite consumers using real-time cash flow, other nontraditional data, and machine learning to assess credit risk. The company offers lines of credit, which are issued by FinWise Bank, and no-interest cash advances. Empower has two million active subscribers and achieved profitability in 2022.