With some $350 billion in U.S. tax refunds given each year, three fintechs have teamed up for Tax Refund Unlock, a new service that offers consumers ongoing, incremental access to the money they would normally receive as a single payment after filing their annual tax returns.
The partnership includes Salt Lake City-based Atomic, a provider of application programming interface (API) payroll integration whose direct deposits payroll offering covers about 75% of the U.S. workforce; Chicago-based financial services platform Klover; and San Francisco-based startup Column Tax, which provides personal income tax software.
Tax Refund Unlock builds on an existing relationship between Atomic and Klover that allows users of the financial platform to access their incoming paychecks early. With Column Tax's income tax capabilities folded in, users will be able to complete a short tax questionnaire and link to their payroll data. The new solution projects users' tax refund total, which then becomes available to Klover users incrementally throughout the year, with an amount added to each paycheck. Members of Klover+, a premium service that costs $2.50 per month, will have access to the service at no additional charge.
In this episode of "The Buzz" podcast, Lindsay Davis, head of markets at Atomic, tells Bank Automation News that the new service targets consumers who might typically access high-cost payday loans and are at risk of bank overdrafts.
"People who've been working hourly jobs were severely hit" during the pandemic, Davis says, "and a lot of bills are about to come due." She notes that programs put in place during the COVID-19 pandemic such as rent or student loan forgiveness are expiring.
Atomic was founded in 2019 and in October raised $22 million in a series A funding round
, bringing its total to $38.6 million in funding. Klover was also founded in 2019 and has raised a total of $68 million in three funding rounds, according to Crunchbase, while Column Tax, founded in 2021, this month raised $5.1 million in a seed funding round, which it said it will use to expand Tax Refund Unlock adoption.