Banking Up Blog

9am sharp: my office phone rings and displays “Cell Phone, Boston, MA”. Not a good sign. When someone calls my direct line from their cell phone as soon as the office is supposed to open, this is a customer being upset with something our company did or did not do, and I need to be prepared to receive an earful.

We operate prepaid card services and a lot of our customers have no other financial instrument available. They are, as the FDIC puts it, “under-banked”. So, even a small hiccup can be a major issue, as most of their everyday money may be sitting in an account we manage.

The man at the other end of the line turns out to be rather courteous, and his issue of a forgotten account password is rapidly resolved. Before hanging up, he has one last question:
- “how much money can I have in this account?”
- “$10,000”, I answer.
- “Good, so I’ll be able to set up my mortgage payments then.”

As he seems to be an atypical customer, I probe him for more details about how he intends to use the card. “See, I am over-banked…” he says. “…I have many accounts at several banks.  In spite of having been with my main bank for so long, they want me to maintain a minimum balance of $5,000 in my checking account and opt for the overdraft protection service, and then agree to pay a fee when transferring money from my savings account, all of this to get “free checking” where they would not charge me a monthly fee. So I like what you guys do and I am switching over.”

Over-banked? This person is making my day, after all. I expect a lot more customers like him fleeing big banks in droves starting this year.

NPR’s marketplace had a segment earlier this month about banks targeting new fees towards lower income customers. The expected outcome: driving these customers away from the banks. Kind of “de-banking” them.

I thought our mission at Plastyc was to help the under-banked. Now we are getting prepared to welcome the over-banked and the de-banked.

Our most recent analysis of about 50,000 visits to the UPside Visa prepaid card mobile portal shows that 47% of the card holders are using an Android phone, dwarfing the iPhone which comes in at 16.5%.

Not surprisingly, a majority of prepaid Visa cardholders tend to prefer… prepaid phone accounts too. And since the iPhone only comes with postpaid subscriptions, it is not as popular as the many Android phones that are now available from prepaid wireless carriers.

Another interesting fact is the amount of mobile access: in December, we had about 50,000 visits to our mobile site versus a bit more than 200,000 visits to our “fixed” website: so, for every 5 PC users, we have someone preferring to use their cellphone to manage their money.
It is probably higher than industry averages. We believe that under-banked users will be heavier users of mobile financial services.
This is in part because staying on top of your money at all times from anywhere is more important when you don’t have a lot of money.