Good advice from Charlotte Stallings on My Fox Houston about reloadable prepaid cards:
According to the Economist’s special report on personal technology of October 8, 2011, the Personal Computer is on its way out.
Consumers will gradually ditch their laptop or desktop computers in favor of smart phones and tablets to handle their everyday online activities. It turns out that the early adopters of smart phones are not only the young and the geeks. They are also people who find them more convenient and cheaper than PCs. Many of them have also disconnected their land-line phone for the same reason.
I surprised many of my industry peers in the past few weeks when I told them that 75% of the people who access their UPside Visa prepaid card account from their cell phone, do so from a smart phone. It is counter-intuitive that consumers with limited access to large banks would be equipped with the latest and greatest mobile phone technology.
Here is the proof. This is our mobile server logs, detailing what type of mobile browser has been used to access accounts from cell phone during the past 3 weeks:
Most wireless network operators now offer an Android phone with their low-cost no-contract prepaid cellphone plans. Kudos to Metro PCS, Virgin Mobile, Cricket Wireless, Boost Wireless, Simple Mobile, T-Mobile, AT&T, Verizon and others for providing your customers with very good phones on prepaid plans.
The new iPhone prices announced by Apple on October 4 will also help increase their penetration among consumers who are usually considered to be late adopters.
This is a big change from only 18 months ago, when only 30% of our customers had a smartphone. Guess what? We are frantically working on a mobile banking smartphone application that will surpass anything available to the under-banked.
At its most profound, the Internet helps drive global change, toppling dictatorships overseas or, closer to home, assisting people to protest Wall Street’s role in the financial crisis and economic inequality.
On a less grand but just as important scale is the Web’s role changing people’s everyday daily lives. From researching medication to buying college textbooks, we do most tasks differently on the Internet.
As creators of Web services, we need to think carefully about how our services affect consumers’ overall wellbeing. A business model that provides a decent value proposition for customers and makes money for shareholders is fine. But it’s not enough. A service, even when used a lot, should cause no harm. Even more, a service should help make people’s lives better.
The need to do right is essential in my sector, online financial services, particularly when serving young or financially vulnerable customers. Offline, there’s a raft of businesses created to profit from people on the financial edge – lotteries, payday lenders and shady mortgage providers. When people use these services to an extreme, it hurts them.
Online startups, can do better. But, how do you make money online and do right, especially with people who are broke? Here are some of the principles we keep in mind:
These are just some of the factors to consider when creating Web services for the 90 percent of Americans, whose average income was $31,244 in 2008. A few weeks ago, the Center for Financial Services Innovation published its version, called the Compass Principles and I’m sure there are others.
How about you? How do you think about building a business that goes beyond “do no evil” to “do right”?
On September 6, Congress passed the “American Invents Act”, a rather complicated bill attempting to fix or reduce the issues with filing, granting and post-grant reviewing of US patents.
For a complete version of the act, see http://www.gpo.gov/fdsys/pkg/BILLS-112s23es/pdf/BILLS-112s23es.pdf
“Patents suck”, said Google chairman Eric Schmidt at the Dreamforce conference on September 1. In fact, Google purchased Motorola mobility in large part for its trove of mobile phone related patents, as a “weapon of mass defense”, because patents have become a tool to obtain financial compensation from competitors largely unrelated to the original intent of providing inventors a period of exclusivity on their inventions.
In July, the radio show This American Life, had a great piece called “When Patents Attack!” about “patent trolls” in the Eastern District of Texas who have no other purpose in life than extracting protection money from companies with real businesses and products. Instead of threatening to set the business on fire, mafia-style, they sue regardless of the merits of the patents they have purchased (of course they have not invented anything themselves), and offer to settle out of court for large amounts of money. Patents have become the equivalent of cans of fuels and boxes of matches.
The financial industry has not been spared by patent trolls. Visa, Wells Fargo, MasterCard, Bank of America, Citibank, and many others have been sued for alleged infringement of patents related to digital currency systems that were never implemented by the owner of the patents and would make any software engineer roll on the floor laughing at their triviality.
In an intriguing twist, the America Invents Act is requesting that the Director of the US Patents and Trademarks Office put a transitional post-grant process in place for reviewing the validity of covered business-method patents. The definition of “covered business-method patents” is explicitly narrowed down to:
A patent that claims a method or corresponding apparatus for performing data processing operations utilized in the practice, administration, or management of a financial product or service, except that the term shall not include patents for technological inventions.
Being no lawyer myself, I interpret the goal of this post-grant review process as being a way to facilitate the debunking of dubious patents, or the defense against patent trolls. It is rather interesting that lawmakers have chosen financial products and services as the target for this transitional process. I guess that they placed a high priority on limiting the use of patents as a weapon against innovators trying to oil the wheel of a stalled economy.
Many in the payment industry have complained that fees for payment cards or for checking accounts are difficult to figure out. So much so that respectable institutions like Bretton Woods and Consumers Union have published contradictory conclusions about which products are the least or the most expensive, while looking at pretty much the same set of products.
I have been arguing that fees are usually fairly explicit and can be found on websites or on paper agreements sent by mail to account holders. Evidently, the current action by the State of Florida against a number of prepaid card providers shows that there is still some improvement to be made in the quality of disclosures. Nevertheless, the most important factor in the impact of fees tends to be forgotten: how will people actually use the product?
That’s why we have introduced recently an interactive fee calculator on the iBankUP website. The calculator allows people to specify how they intend to use our payment service.
We ask 7 questions to our visitors:
Once a visitor to the site has answered the seven questions, a simple press on the “Calculate” button will produce the total sum of fees that the user would incur during an entire year. Of course, we also show how much fees some of our competitors would have charged based on the same behavior.
You can try the calculator by clicking here.
We also explain the math behind the calculator in an accompanying document.
We sure hope that others in the industry will do the same and publish their own calculators for all to see.
