How Does Greenlight Make Money? Business Model of Greenlight


How Does Greenlight Make Money

If you are wondering how green light makes money, this post is for you. In this article, we’ll take a look at Greenlight’s business model in detail and the revenue streams it uses to make money.

Greenlight makes money by charging users a monthly subscription fee for using their platform along with interchange fees from all transactions made using their prepaid debit card.

About Greenlight

Greenlight is a platform that helps parents teach their children about financial responsibility. The company provides parent-issued debit cards that act as a learning tool for families. By using these prepaid cards, parents teach their children how to navigate their future finances.

Greenlight wants to help parents teach their children basic financial concepts, from spending to saving, without making it feel like a chore.

With over four million users, the company has made its mark by providing kid-friendly debit cards to families. In doing so, Greenlight has made smart money management exciting for kids and grownups alike.

Greenlight generates revenue from their paid subscriptions. For a monthly fee, parents can educate their kids on things like financial literacy and investing using the Greenlight platform. Offering multi-level subscription plans, the company generates revenue from over three million households and counting.

 

Business Model of Greenlight

With a mission of “helping parents raise financially smart kids”, Greenlight has quickly gained steam as a titan in the industry.

CEO and co-founder Timothy Sheehan grew concerned about the lack of money management education for kids. Though he was fortunate to learn from his parents, he realized that many people are not afforded that same privilege.

Financial literacy is not something that is typically taught in schools though it is a necessary part of growing up.

Their goal is to teach children how to spend and save money while they’re young. Children will inevitably make mistakes, however, Greenlight allows parents to have open discussions with their children to correct them. In doing so, they prevent their child from ruining their credit or experiencing debt, setting them up for future success.

Greenlight does not simply issue debit cards to children. They also take pride in educating children on how to make healthy financial habits. The company provides valuable resources on its mobile application to make learning fun.

 

Debit Cards

Though the company was founded in 2014, they did not introduce their debit card to the public until 2017. Once launched, it proved to be an exceptional tool for both children and teenagers alike.

With the Greenlight card, parents have oversight in choosing not only how much their children spend, but where. The card can be used almost anywhere, yet parents have the option to limit access to certain stores and establishments.

Greenlight also makes inappropriate vendors inaccessible to purchase from to keep children safe from negative influences and predators.

 

Educational Tools and Resources

Using their mobile application, parents can teach children that money doesn’t grow on trees is not just an old adage. The app provides a chore-tracking tool to help kids learn the value of hard work.

Also included in the app is an automatic payment system for parents to remit scheduled allowance payments.

 

Savings Account

Many parents may worry that giving a child a debit card could foster excess and frivolous spending.

However, with Greenlight, kids are taught the importance of saving with their very own savings account. Parents can incentivize their children to hold onto their money by offering parent-paid interest.

The app also provides a savings goal management program so that families can celebrate reaching their targets together. Additionally, parents can opt to receive approval requests before their child retrieves any funds from their savings account.

 

Cashback

The company also provides an opportunity for children to learn about smart spending. Included in all of their subscription plans, kids can earn a small percentage of cashback on their transactions.

 

Investing

Greenlight teaches children the fundamentals of investing using a hands-on approach.

Under the Greenlight Invest+ and Greenlight Max subscription plans, users can access information to help jumpstart their child’s investment journey.

For example, users can begin investing with only a dollar by purchasing fractional shares. Parents can also monitor and manage each purchase.

Furthermore, users have the opportunity to trade investments. Greenlight equips young investors with an understanding of the market including how to research stocks backed by analysis from Morningstar.

Users can then trade investments with confidence at no additional cost to parents.

 

Riskfree Learning

Greenlight recognizes that children make mistakes. Sometimes a card is lost or stolen, or a transaction is incorrectly made.

Greenlight promises a safe space for children to obtain financial literacy, all under the umbrella of parental consent. Parents can monitor their child’s activities and manage all transactions, including freezing lost or stolen debit cards.

Greenlight debit cards are FDIC-insured for up to $250,000, and also include Mastercard’s Zero Liability Protection. Moreover, the app includes fingerprint and facial recognition software so that users can further protect themselves. This allows parents to rest easy knowing that their money is kept safe even in the worst of scenarios.

The company provides a tool for children to learn healthy financial habits that they can take with them into adulthood. In an interview, CEO and co-founder Timothy Sheehan noted that many users use Greenlight up until they graduate college.

With a business model that focuses on the next generation, Greenlight has positioned itself to become a leader in the industry. Their trusted reputation has earned them millions of customers, both new and returning.

 

How Does Greenlight Make Money?

With the majority of families remaining at home due to the COVID-19 pandemic, Greenlight found an increase in interest. More than ever, parents are now finding extra time to invest in their children’s financial literacy.

Many families trust Greenlight to give their children the hands-on experience and easy-to-follow educational resources that they seek.

Greenlight makes money from their paid subscription plans and Interchange fee fees on debit card transactions. While the company is consistently increasing its revenue, families are saving more and more by joining the Greenlight family.

Serving over three million households, Greenlight has saved users $120 million dollars and counting with their smart tools and resources.

 

Greenlight offers a multi-level subscription service on their mobile application for families looking to take advantage of their program.

Members have the opportunity to choose between three different plans: Greenlight, Greenlight Invest+, and Greenlight Max. Each plan is created based on the level of necessity.

 

Greenlight

With this plan, parents pay the lowest price of $4.99 monthly. In exchange, they have access to the platform’s valuable tools and resources.

These features include an application teaching money management, a number of core financial tools, and a few other basic necessities.

 

Greenlight Invest+

This mid-level plan offers the same features found in the Greenlight package, with the addition of their investment platform. For $7.98 per month, families can expect to receive an added benefit that teaches children the fundamentals of investing.

With the plan, kids can begin their journey towards investment by buying shares from some of their favorite companies.

 

Greenlight Max

Opting for their most comprehensive package, families have access to all that the Greenlight program has to offer.

For just $2 more per month, families receive various protections such as identity theft, cell phone, and purchase. Kids also become eligible to earn cashback with their exclusive black card.

 

Interchange Fees

By partnering with Community Federal Savings Bank, Greenlight earns a percentage when a transaction is made using the Greenlight debit card.

In doing so, the company makes money every time a user utilizes one of their most important features.

 

Custom Card Fee

Greenlight offers a suite of customizable debit cards for an additional $9.99 fee.

Kids can personalize their debit cards with an image that represents themselves in the best light. This is a fun and affordable way for kids to make their debit cards a one-of-a-kind piece of art.

 

Card Replacement Fee

The company will provide customers with their first replacement card for free, but subsequent replacements are $3.50 per card (or $24.99 for express delivery)

 

Greenlight Funding, Valuation, and Revenue

In 2017, the company attained an impressive achievement in less than six months from its inception according to TechCrunch.

In their first funding round, Greenlight raised $7.5 million from investors Relay Ventures, New Enterprise Associates, and more. With this money, the company planned to employ more staff to expand efforts to drive more users to the platform.

The company received $54 million in Series B funding in 2019. This funding round was led by notable investor Drive Capital. Greenlight would quickly see even more growth in the coming rounds.

In a 2020 interview, Sheehan noted that the company has grown by 300% each year. Recognizing their growing achievements, investors quickly decided it wise to be a part of their success.

The company earned $215 million in funding in their series C funding round, bringing them to a $1.2 billion valuation.

This year, the company was able to earn $260 million in their series D funding round led by Andreessen Horowitz. Thanks to investors, Greenlight earned a $2.6 billion valuation. This is almost double what the company was valued at only months prior.

The company has received a total of over $550 million in funding to date. It is becoming increasingly more likely that their trajectory is to surpass that in the coming years.

And though exact figures are unknown, the company has claimed to have tripled its revenues year over year.

 

Is Greenlight Profitable?

Greenlight, the high-growth kid-friendly fintech startup is not yet profitable. The company is utilizing funds to speed up product development and growing its distribution partnerships and geographic reach.

Since its start, Greenlight has been making waves, creating a name for itself in the industry. Notable investors like Andreessen Horowitz believe that the company is slated to become a leading brand, trusted and loved by consumers.

With an impressive track record to back them up, Greenlight is most certainly positioning itself for great success in the near future.

 

Conclusion: How Does Greenlight Make Money?

Greenlight is definitely a good idea, and it seems to be getting better and more popular all the time. It has grown immensely over the past few years and is currently valued at $2.3 billion.

The future of Greenlight looks bright and success is certain because of the company’s ability to consistently grow its customer base year over year.

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