Vancouver FinTech startup Mogo has launched MogoSpend, a free, new, prepaid Visa-based digital spending account that encourages sustainable spending and offers automatic carbon offsetting.
MogoSpend, which was made available to a select number of waitlisted users beginning in January, is now available to the general public through Mogo’s free app for iOS or Android.
“We hope we can help [our members] achieve a net zero carbon footprint and…make a meaningful impact on carbon reduction.”
Mogo calls its new offering the “first product of its kind designed to help Canadians improve their financial health and the health of the planet through better spending control and automatic carbon offsetting.” MogoSpend aims to help users reduce their consumption via spending insights, automated budgeting controls, and goal-setting options, while also incentivizing them to lessen their negative impact on the environment.
To achieve the latter goal, the company has partnered with Vancouver-based sustainability and carbon-management solutions provider Offsetters, which helps organizations reduce and offset their environmental impacts. Carbon offsetting is a process where the damage caused by releasing CO² is reduced by acts that remove CO², like planting trees.
“In 2020, we are dealing with a global pandemic, rising financial and social inequality and an escalating climate emergency,” said David Feller, Mogo’s founder and CEO. “This has created an urgent need for a more sustainable way to manage our finances—one that takes into account our financial health, the planet’s health and the health of our society.”
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“Our goals in creating MogoSpend were to create a new way for Canadians to manage their spending that helps to address these problems and to make the product accessible to everyone, regardless of income,” the CEO added.
Founded in 2003, Mogo is a digital challenger bank that offers a wide range of online financial services, including access to loans, credit, mortgages, investing, and credit score viewing through Equifax. The TSX-listed startup aims to become “the go-to financial app for the next generation of Canadians.”
Mogo announced MogoSpend in January. In April, the startup temporarily laid off 30 percent of its staff and instituted company-wide expense cuts, including executive compensation, citing “current economic volatility and uncertainty” in light of COVID-19. When reached for comment, Mogo told BetaKit it has brought people back from temporary layoffs “on several teams,” though did not disclose the amount.
In March, Mogo announced a three-year lending partnership with alternative financing provider goeasy, five months after the two companies introduced a personal loan pilot program. The Vancouver startup also sold the majority of its MogoLiquid digital personal loan portfolio to goeasy for $31.9 million, using the proceeds to repay one of the company’s credit facilities, strengthen its balance sheet, and support its growth initiatives.
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The new MogoSpend account comes with a Mogo Visa Platinum Prepaid Card, budgeting features, and no monthly, annual, or purchase transaction fees. Users load the account with their own money, limiting themselves to a specific budget. Because the prepaid Visa isn’t a credit card, user credit scores are unaffected. The only fees Mogo charges are for ATM withdrawals, adding money at Canada Post, account inactivity, and foreign currency transactions.
One notable change from its trial earlier this year, is that MogoSpend no longer offers a cashback option. Mogo told BetaKit, “Given our focus is on helping consumers be more sustainable in their finances and after testing cashback for over a year, we determined that cashback actually, for many, drove increased spending, whereas focusing on offsetting is actually more effective at driving more mindful consumption, which is ultimately the goal we are trying to achieve.”
“Canadians spend more than $900 billion annually in cash, debit and credit cards payments, and this is increasing as more and more people and businesses go cashless,” said Feller. “As our members adopt MogoSpend—and we bring new members into the Mogo account—we hope we can help them achieve a net zero carbon footprint and, collectively, make a meaningful impact on carbon reduction.”
Mogo currently supports the REDD+ Amazon Forestry Project, which aims to protect the Amazon Rainforest from deforestation. For every dollar a MogoSpend user spends, “one pound of CO² is offset on the consumer’s behalf,” said the company.
In many cases, the startup said, its MogoSpend program will offset more CO² than its users contribute.
Mogo claims its app currently has over 1,000,000 users.
UPDATE 29/07/2020: This article has been updated to reflect that Mogo has rehired some laid-off workers and the changes to MogoSpend’s cashback feature.
Image source Mogo via company website