Step is a neobank designed specifically for teenagers, providing a blend of financial independence and parental oversight. It stands out as one of the latest tools aimed at introducing young individuals to fiscal responsibility while allowing parents to monitor their children's spending habits.
This innovative concept has garnered attention across various platforms, with features on Insider, Forbes, Reuters, and TechCrunch.
The concept. At its core, Step is a forward-thinking mobile banking solution that eschews the traditional brick-and-mortar framework in favour of a fully digital experience. It targets the age group of 13 to 18-year-olds, offering a no-cost service that includes a standard account and a Visa card. The necessity for a banking option like Step parallels the increasing complexity of initiating youngsters into the world of finance.
Previously, to instil a sense of financial management and start the credit-building process, parents had to resort to adding their child as an authorized user on their credit card. Step removes this barrier, providing a streamlined and accessible banking platform.
The founders of Step, CJ MacDonald and Alexey Kalinichenko, envision a future where financial literacy is instilled from a young age. They argue that the staggering statistics—such as the average American incurring over $350 in banking fees per year and a significant portion of teens experiencing overdraft fees without understanding their implications—stem from a lack of financial education early on. With Step, the aim is to equip young individuals with the knowledge and tools necessary for economic success, highlighting the importance of financial literacy.
The investors. Step has quickly captured the interest of key investors, along with endorsements from influential figures like Justin Timberlake, Will Smith, Charli D’Amelio, and Eli Manning. Its appeal lies not only in its educational potential but also in its innovative approach to banking.
How Step Works
Operating exclusively through a mobile app, Step blends traditional banking facilities with modern features to cater to its young audience. The Step Visa Card, central to its offerings, operates on a unique model that allows it to function akin to both a debit and a secure card. This enables teens to make purchases with the funds they have, while simultaneously building a credit history—a feature not commonly found in standard debit cards.
Opening a Step account comes with a host of benefits. Apart from its primary audience of teens aged 13 to 18, Step requires a sponsor—usually a parent or a legal guardian—to oversee transactions. It effectively eliminates the risk of overdraft fees, supports spending and withdrawals wherever Visa is accepted, and provides an easy method for money transfers. Additionally, it integrates with mobile payment options like Apple Pay and Google Pay, ensuring a seamless spending experience.
Moreover, Step takes security seriously, employing robust encryption and authentication methods to safeguard user data and funds. As it partners with Evolve Bank & Trust, a member of the FDIC, Step accounts are insured up to $250,000, offering an extra layer of financial safety. The absence of a monthly fee further enhances its appeal, although it’s worth noting that withdrawals outside of its 35,000 ATM network may incur charges.
For parents, Step offers comprehensive oversight capabilities including the ability to monitor activity, receive notifications, and even freeze the card if necessary. Its global acceptance, courtesy of Visa, adds to its versatility, enabling international use.
In essence, Step represents a significant stride towards demystifying banking for teenagers, fostering a culture of informed financial decision-making and responsibility from a young age. Its innovative model not only empowers teens with practical banking tools, but also instils foundational principles of financial literacy, setting the stage for a future of savvy consumers and investors.
