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Teens may be interested in getting reloadable gift cards as holiday gifts, but parents have not been on board with the trend, a recent survey by Socialwise Inc.'s BillMyParents suggests.
December 15 -
BillMyParents made a strong course correction when it chose to abandon its inventive online parent-billing payment system for a more conventional product: plastic cards.
The transition to a new product, which took place in 2010, has gone well, it says. Although the San Diego company's original plan was to disrupt online payments with
The amount of money loaded nationwide to open-loop reloadable prepaid cards grew 40% to an estimated $57.2 billion in 2011, according to Mercator Advisory Group. This is nearly triple the amount that was loaded to prepaid cards in 2008.
"We thought we could help a lot more people in the teen spending area by going with a broader solution that more people could take advantage of in a broader age range," says Michael McCoy, BillMyParents' chairman and chief executive. McCoy joined the company in September 2011.
The BillMyParents prepaid card, called SpendSmart, maintains the premise of
Parents also control how much cash is loaded to the card. It can get regular loads for allowance as well as one-time loads for emergencies.
The card has a $3.95 monthly fee, a $2.95 fee for emergency loads and a $1.50 fee for ATM withdrawals, among other fees. Parents have the option to disable ATM access, and the card cannot be used at liquor stores and casinos.
A key advantage the card has over BillMyParents' earlier payment system is that, as a regular MasterCard-branded prepaid card, it does not require anything special of the merchants that accept it. The original online-focused BillMyParents payment system required merchants to add a button to their websites for teens to click.
"We have refocused from a button … to a card that can go out and touch millions of teens," says McCoy.
Though BillMyParents is focused on its prepaid card today, it may revive its online payment system in the future, McCoy says. It might also license the online payment technology to a third party, he says, and at least one company has already offered to buy a license
"As we build out a broader suite of tools and products for families that are focused on responsible teen spending, that [online payment tool] could be part of a family of products to offer," he says.
Some of the prepaid card's features are unique to BillMyParents.
"I have not seen a bank account that does" instant notification of purchases, says Ben Jackson, senior analyst at Mercator Advisory Group.
"For parents who are concerned about how their children are spending money, this could be the feature that puts BillMyParents out ahead of the competition," he says.
Still, creative teens may sidestep some of the card's protections by, for example, using the card for ATM withdrawals and then spending the cash anonymously, Jackson says.
If the SpendSmart product is used mainly as an ATM card, "that could make the card more expensive to operate for the company and less appealing to parents," Jackson says.
