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:
- 1- how much $$ will you direct-deposit to the card every month?
- 2- how many cash deposits will you make per year (using a Green Dot MoneyPak)?
- 3- How many cash withdrawals will you make from ATMs every month?,
- 4- How many bills will you pay (i.e. by writing checks) per month?
- 5- How many PIN-based purchase transactions are you likely to do every month?
- 6- Are you accident-prone? How many times per year will you attempt to spend more than you have?
- 7- How often do you think you will need to call customer support and speak with an agent?
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.