(Bloomberg) — Zeta Services Inc., a banking and credit card technology unicorn, has raised $30 million from investors including Mastercard Inc., and the two announced a five-year collaboration to help customers launch credit card services.
With the latest round, Zeta will have raised a total of about $280 million and pushed its valuation to $1.5 billion, Bhavin Turakhia, co-founder and chief executive officer said in an interview. SoftBank Group Corp. and Sodexho SA invested $250 million last year, making Zeta a unicorn.
The startup has added two of the top 25 U.S. banks to its roster of customers and is negotiating with another, as banks around the globe move online and away from operating physical branches. Zeta provides the backbone cloud technology for processing credit transactions, core banking operations, mobile banking and personal finance management.
“Covid has made brick-and-mortar branches irrelevant,” Turakhia said. “Customers want instant service with a tap of their mobile phones.”
Such digitization is difficult on legacy banking technologies, but newer startups like Zeta have hastened internet banking and credit card services, he said.
Mastercard will provide support in areas such as fraud detection, risk and loyalty solutions, while Zeta will help customers make card issuance faster and more flexible with its loan-processing and credit technology solutions. The two aim to help customers create and launch credit cards within a day, condensing the months-long timeline for such offerings, Turakhia said.
“Mastercard and Zeta are together targeting issuance of cards that will lead to $60 billion in purchase volume over the next five years,” he said.
Zeta was founded by Turakhia and Ramki Gaddipati and has its roots in India. Turakhia, who was born and raised in Mumbai, founded his first startup, domain-name registry Directi, with his brother in 1998 and sold it for $160 million in 2014. The duo’s other startups include Flock, which offers collaboration tools for enterprises, and Media.net, which they sold for $900 million.
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