For many kids (and adults), asking mom and dad for money to go do something with friends is a weekly ritual. However, as fewer people use cash, parents may not have money they can easily lend to their children.
Greenlight, a fintech cardmaker for kids, built an app that lets parents instantly put funds on prepaid debit cards that their kids can only use at specific stores predetermined by the parents. If you want to make sure your teenager actually uses that $10 at Starbucks, you can set Greenlight to only approve transactions at Starbucks.
To learn more about how Greenlight is bringing fintech innovation to the children, we caught up with Tim Sheehan, Greenlight’s CEO and founder. This interview has been edited for clarity and brevity.
Benzinga: Tim, tell me the story of Greenlight. How did you start the company?
Tim Sheehan: Well, it all started because I have four kids. My wife and I were getting a lot of requests for money from the kids, and what we were finding was that we were always paying for things with our credit and debit cards and weren’t carrying much cash. Giving money to our kids for pocket money or allowances, to travel with a sports team or go to the movies with friends, we were encountering this problem [of having cash to give the kids] because we weren’t carrying cash frequently.
Given my financial services and technology background, I thought there was a better way to handle this. But let me first see if other parents are having the same problem. I talked to about a hundred different parents at random and learned that yes, they were having this problem—and they never got the change back when they gave cash to their kids!
There were lots of other things parents were considering, too: parents don’t necessarily always know where that money was spent, things like that. Then, I did a survey of about a thousand parents nationwide to see if this problem was pervasive, and again, it was validated. So the idea came from my own personal experiences and conversations with parents.
When kids hit middle school, they start to spend more time away from their parents, and there are situations in which you need to give your kids money. And even after they’re away from you, they may need more, so having a digital solution to [that problem] makes sense. We built this first version of Greenlight that lets parents instantly give their kids money on a prepaid debit card. Then we built these unique parental controls that let parents decide the specific stores that their kids can spend money at—”here’s $10 for Starbucks, or the movie theater.”
We’re the first company in the world to come up with this store-level control, in which parents can choose the specific store name where you’d like your kids to be able to spend. Parents can also turn the card on or off through a connected app, we give real-time alerts to the parents every time the card was used, we let them automate allowances, and different things to make it safer, easier and more convenient for both the kids and the parents.
Benzinga: It seems that the fintech innovation behind Greenlight is the combination and extension of several existing services—what’s the core technology behind the app and card?
Sheehan: The technological advancement we came up with is the store-level controls, because nobody else has that. It’s this ability for the parent to say that they’re comfortable with their kid going to Starbucks or Chik Fil-A or Waffle House or The Gap, set the amount they’re comfortable with their kid spending at those stores, and then the kids can only use the money at those stores for the approved amount.
If they try to go to a different store, the card will be declined. If they try to spend more than what their parent gave them, the card will be declined. What’s nice is if the kids are in a tight spot and need money right there, they can make an emergency request through the app and the parents can get them the money with a few taps on their phone. In case kids need an Uber ride home from a party or doesn’t have enough money to get the thing they needed at the store, they can get that money.
Benzinga: How does the technology work? At what point in the payment processing sequence does Greenlight recognize which store the child is at?
Sheehan: That’s kind of the secret sauce! But what happens is when the child swipes the card, a normal transaction happens in which it goes through the MasterCard network, it goes to our processor. The unique part is that the processor sends it to Greenlight and Greenlight’s server will either approve or decline the transaction based on what the parent has approved—all within milliseconds. That’s the magic. You don’t see any delay or anything—it all happens within a second or so of the swipe. The app, server and the card are all linked.
We did a tight integration with the processor to make sure it could all happen incredibly fast, so there’s no difference between an ordinary transaction and a Greenlight one.
Benzinga: You have a holistic background in financial services—Yahoo! Finance, Yodlee, etc. How did you pivot from working deep within the guts of the industry to a mass-market product?
Sheehan:The thing that I’m most proud of with Yahoo! Finance is how much it helped individual investors, since a lot of the information it contains was only available to professionals, in the hands of a privileged few. What we did was bust that open and give all consumers access to that information so they could make smart investment decisions.
We have a similar goal with Greenlight. We want to impact society in a big way again, and do that by helping parents raise financially smart kids. I want the next generation to be super smart with money across the board, whether it be learning to spend wisely, the importance of saving money, how to build wealth by investing, why credit matters, and so on.
The other thing is how time-strapped parents are. If we do it right with Greenlight, we can make it really easy for parents to educate their kids to be financially savvy.