Berlin personal finance startup Number26 has raised €10 million in a funding round led by PayPal co-founder Peter Thiel’s fund Valar Ventures.
This is Valar Ventures’ first investment in a German start-up, following an investment in London-based money transfer firm Transferwise in 2013.
Number26, which launched in Germany and Austria this year, provides users with a MasterCard credit card and an account offered by German partner bank Wirecard.
The account is operated through the Number26 app, which offers instant notification of transactions and allows users to block and unblock the account with the click of a button.
The app also allows users to visualise their spending habits more clearly, mapping transactions according to categories such as ‘restaurants’, the Financial Times reported.
The start-up will use the funding to hire more staff and develop new features, including a fraud detection system that uses geo-location to establish the location of the user’s smartphone, comparing it to where the card has been used.
Number26 makes money from a portion of the transaction fees charged to merchants, and also earns interest on the funds deposited with the partner bank.
Winning backing from Valar Ventures is a “huge step” for the company, said Number26 chief executive Valentin Stalf.
Number26 operates more like a debit card than a normal credit card. Since transactions debit the account immediately, the total that can be charged to the account is limited to the account balance.
But it can only be used at businesses that accept credit cards, which could be a barrier to further adoption in cash-focused Germany. Credit cards make up a 7.4 per cent share of retail purchase turnover in the country, compared to 53 per cent for cash.
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