Welcome to our new Payments Insider newsletter, a morning email with the top news and analysis on the digital payments industry, produced by BI Intelligence.
T-MOBILE TO PUSH FURTHER INTO CONSUMER FINANCE. Yesterday, telecom T-Mobile announced that it is now offering a pre-paid payment card. The service, called Mobile Money, is most beneficial to T-Mobile subscribers, for whom the card will have no fees for activation, in-network ATM withdrawals, monthly maintenance, and cashing checks. While those who are not T-Mobile subscribers can also get a pre-paid card, they will not get many of these same benefits. The card is clearly aimed at T-Mobile users.
The Visa-branded pre-paid cards are issued by Bancorp and can be funded in-store or through direct debit or by mobile check deposit.
The brilliance of this offering is that many of the benefits of the pre-paid card are enhanced by downloading the Mobile Money app, which provides customers with the ability to deposit checks using their phones, find ATMs, add funds, and check account details. Sounds a lot like a retail banking app doesn’t it? (T-Mobile)
Here are a few reasons why this strategy makes sense for T-mobile:
- T-Mobile already has retail “banking” locations: The company has around 7,500 branded retail locations all over the country which can serve as a “banks” for customers to deposit funds for free.
- Mobile Money is a free advertising channel: When customers deposit funds at T-mobile stores they are going to see T-Mobile products which could lead to increased sales.
- It strengthens loyalty: Using the same company for banking and mobile will be convenient for customers and they will be unlikely to give up that convenience.
- T-Mobile already has a huge market: T-Mobile already has 45 million customers who may decide to use Mobile Money.
- The unbanked are another huge market: There are around 17 million Americans without bank accounts. Mobile Money will be attractive to this market because consumers can get a product that works like a bank account and a mobile plan that doesn’t require a long-term contract.
- It puts T-Mobile in a good place if smartphone payments take off: If T-Mobile can get subscribers to adopt this new offering, they will be well-positioned as a mobile wallet provider, as consumers move from plastic cards to smartphone payments.
PAYPAL SEES DOUBLE-DIGIT USER GROWTH AND A SPIN OFF IS PROPOSED. eBay reported that PayPal added 5.2 million new users in the fourth quarter of 2013, to end that year at 143 million users. The fourth quarter growth represents an increase of 16% year-over-year. PayPal saw 16% year-over-year growth during the same period in 2012 as well. PayPal’s growth in users looks like it is very similar to Amazon’s (see chart), although the companies report users in different ways so it isn’t a purely apples-to-apples comparison. One thing that is certain — both companies are way behind Apple in terms of account holder numbers and growth. Apple has lately been showing signs that it may move into the payments space, as we covered in a recent edition of Payments Insider. (TechCrunch)
Activist investor Carl Icahn has proposed that PayPal should spin off into an independent business unit, according to the eBay earnings conference call. Icahn’s proposal isn’t new and some investors argue that a spin-off could improve PayPal’s business. If it operated independently of eBay, other e-commerce companies wouldn’t see PayPal as a competitor and would be more likely to accept it for payments. eBay CEO John Donahue rejected this notion arguing that, “eBay accelerates PayPal’s success, makes PayPal smarter, and funds PayPal’s growth.” Analysts suspect that this could be the beginning of a proxy war. (Reuters)
WELCOME, INSIDERS: The Payments Insights newsletter is now Payments Insider, a reflection of our increasing emphasis on the day’s most important topics in payments, as well as news exclusives of interest to industry insiders. We look forward to the newsletter becoming an even more important part of your morning routine.
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THE NRF GOES TO WASHINGTON. In a letter to House Speaker John Boehner, the National Retail Association (NRF) laid out its position on payment card security following the Target data breach. In particular, the NRF affirmed its support for the “chip and pin” or EMV card standard, as well as a new law that would ensure that the commercial sector would quickly share information about threats and breaches, and a breach notification law at the federal level rather than the state level that would ease retailers’ compliance burden. Retailers have a stake in the fallout from the Target data breach because they often pay the costs associated with fraud. (NRF)
RETAILERS ARE CONSIDERING COMBINING MARKETING AND PAYMENTS CHANNELS. 30-six per cent of CIOs are considering adopting a single platform to manage purchase transactions and mobile marketing initiatives, according to a new survey from the NRF. This is good news for a host of companies that provide integrated marketing and payments experiences — Level-Up and Square for example. (NRF)
ROYAL BANK OF CANADA LAUNCHES ITS MOBILE WALLET. Today, the Royal Bank of Canada (RCB) announced the launch of its new mobile wallet. The wallet uses NFC as a payment communication frequency and allows users to link their debit and credit cards to the app. The mobile wallet is currently only available to RCB customers who use Samsung Galaxy S III or Samsung Galaxy S4 with an NFC-enabled SIM card. (Finextra)
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