Vancouver-based fintech Koho has launched across Canada today, after two years of development in a closed beta. Koho aims to take on Canada’s big banks, by offering a fee-free spending account, through the use of a Visa prepaid card and their iOS app.
Koho dubs itself as a “modern-day mobile hub for personal finance”, as it has partnered with Visa to allow users to spend their money at retail, while People’s Trust will hold user funds as the regulated financial institution on their behalf.
The service allows users to deposit their paycheques, pay bills, send Interac e-Transfers and more without fees. Koho also integrates automatic savings goals, instant Koho transfers, chat support, low balance push alerts, and real time updates.
“We’ve seen a lot of this in the news lately,” says CEO Daniel Eberhard, in a statement to iPhone in Canada. “Canadians are paying some of the highest bank fees in the world while being sold products they don’t need or understand. We don’t think that’s right.”
VP of marketing Spencer Chen explained to me Koho looks to bring features from services like Mint, Venmo, PayPal, Acorns and Digit, in one solution for Canadians. Their 1,051 beta testers were depositing about one-third to one-half of their pay cheques every two weeks into Koho, while using the service about eight times per month. The private beta saw over 10,000 Canadians sign up, with over $1.3 million dollars transacted.
Koho is backed by venture capital, raising $2.6 million from the founders of Hootsuite and Spotify, and Portag3 Ventures, the investment arm of Power Financial Corporation; the latter also has an investment in robo-advisor WealthSimple.
How does Koho make money? They are able to operate purely on interchange fees when customers use the Koho Visa card at retailers. In the future, the company tells us they hope to offer other services such as credit scoring and lending.
Update: As for Apple Pay integration, Koho explained to us it’s in the pipeline for mid-Q2. Also, the option for joint accounts are coming in “late Q2”, along with rewards for the Visa card in the early third quarter of this year.
For now, Koho is purely app-based with no access available via the web. Users are able to setup their accounts in under three minutes, according to the company. The target market for Koho are millennials or younger users, who don’t want to step foot into a bank or pay high fees on maintaining a savings or chequing account.
Click here to download Koho for iOS in the App Store (the service isn’t in Quebec yet). Let us know if you’re going to give Koho a try.