“Mobile banking for young people” app Osper raises $10m

A start-up that has created a prepaid debit card and mobile banking app targeted at under-18s today announced it has raised more than $10m seed backing from a group of prominent European investors and CEOs including Horizon and Index Ventures.

Launched today, the Osper app combines a pre-paid debit card with a mobile banking app and is designed to teach young people the fundamentals of financial independence and money management, which the London-based start-up claims is an area underserved by the education system.

Users can use the pre-paid Osper card in stores, for cash withdrawals at ATMs and for online purchases and subscriptions, in much the same way as a traditional debit card.  The cards are free to use for the first year and £10 per year thereafter.

Designed for eight to 18 year olds, Osper uses a ‘dual app’ system for children and parents, enabling parents to monitor spending and loading in real-time and receive SMS alerts when transactions are declined due to insufficient funds.

The app is not tied to a physical bank and Osper claims that parents can set up an account online in under two minutes, with fraud and identity checks taking place in real time.

The start-up was founded by Alick Varma, a former maths teacher and entrepreneur who previously worked with Kenyan mobile payments platform M-Pesa and online streaming service Spotify.

The $10m backing is a significant display of faith in the newly-launched app’s potential, and contained input from Index Ventures – former backers of Dropbox and Mind Candy – and venture capital firm Horizon, previous investors in Spotify, Facebook and Skype.

Travelex CEO Peter Jackson and ex-Sainsbury’s Bank chairman Darren Shapland were also amongst a number of high-profile CEOs and business leaders which participated in the round.

Alick Varma, founder of Osper, said: “Despite three quarters of young people having a bank account, less than 30% use online banking and there is a heavy reliance on parents lending cash or their credit card for purchases with one in five UK children using their parents’ cards in secret. There is a need to reinvent banking for young people; they should have the tools to build self-confidence to manage money from a young age.

“Parents currently spend an average of £10,000 a year on their children but young people are only accountable for around 5% of that – this leads to far too many young adults leaving home without experience of budgeting and unprepared to manage the financial responsibilities ahead of them.  Osper gives young people the freedom and control needed to ‘learn by doing’ within the framework of a safe and secure family environment.”

Robin Klein, partner at Index Ventures, added: “We have huge confidence in the purpose and global potential of Osper. Its smart and simple mobile approach will no doubt generate huge interest from young people and their parents and give them the tools to have an open dialogue about financial responsibility.

“We are proud to be invested in a service with such ambition.”

Peter Jackson, investor in Osper and chief executive of Travelex, said: “Osper provides banking for young people using the devices they understand – no branches or cumbersome setup process, just user-friendly mobile apps within a safe, secure and regulated environment.

“I have no doubt the service will disrupt consumer banking for young people and beyond.”