With startups steadily squeezing out the fees for retail payments, doing to same thing for people buying stocks was probably inevitable — it just took longer in the heavily regulated brokerage space.
But startup Robinhood Financial has finally launched its long-awaited zero-fee stock-trading app, VentureBeat reported on Thursday (Dec. 11).
The iOS app, which has been in beta for six months and has 500,000 potential users on its waiting list, is a minimalist app that lets users set up an an online brokerage account, transfer funds from accounts at major banks (including Chase, Citi and Band of America) and check the prices of their stocks.
But the big draw for Robinhood is the fact that basic trades are free. The company expects to pay its bills through interest on funds held in cash accounts, margin lending, and eventually fees for higher-value brokerage services.
At launch, the app is U.S. only — only users in the U.S. and Puerto Rico can open accounts, and trades are limited to U.S.-based stocks or exchange-traded funds. The app is also specifically targeted at Millennials — roughly 80 percent of the Robinhood app’s beta testers were under 30 years old, with an average age of 26. The company expects the lack of account minimums and trading charges to appeal to young investors with less cash, and said about half of the beta testers made their first stock trade ever with the app.
Robinhood’s iOS version uses the iPhone’s Touch ID or password for authentication. Android and Apple Watch versions are slated for release in the first half of 2015. The company, which has $16 million from investors including Index Ventures, Ribbit Capital, Google Ventures and Andreesen Horowitz, hasn’t said when it will start offering the fee-based services.