PreCash, which provides payment services focused on the underbanked, is launching a mobile wallet designed for that audience's unique needs.
Most mobile wallets are designed for bank customers, who have multiple cards to link to their phones for payments. Unlike those, the focus of PreCash's FlipMoney wallet is not on rewards or making wireless payments at the point of sale. Flip's features at launch focus on getting money into and out of a PreCash prepaid card account in real time.
"Current mobile check solutions can take up to six days before somebody gets their money — that does not work for someone living from paycheck to paycheck," says Steve Taylor, PreCash's CEO. "They need their money immediately."
Flip will offer instant mobile check deposit and instant bill payment — features that matter a lot more to the underbanked than to the banked. People who live paycheck-to-paycheck need to obtain the funds from their paychecks and then transfer those funds to their billers right away, Taylor says.
"What comes in goes out and they need to be able to pay for their services quickly," he says. "They need the instant deposit to be able to do that."
For instant check deposits, PreCash plans to charge $1 plus 1% of the deposit amount for a payroll or government check and $1 plus 3% of the amount for personal checks. There is also a standard-speed option for a flat $3 fee per item. PreCash does not plan to charge for expedited bill-payment.
Providing instant access to funds can be risky when serving the underbanked. Other companies that have approached the issue, such as Plastyc and Mitek, take steps that banks typically do not when providing mobile check deposit services.
For example, the prepaid card provider Plastyc plans to use the phone's GPS to enforce a rule that its customers deposit checks only from home. This would deter customers from first scanning a check for remote deposit right outside a check-cashing store, and then going into that store to cash the same check.
As an added security measure, Plastyc also plans to randomly phone people when they deposit checks with a smartphone.
Mitek, which provides check-imaging technology to financial institutions, developed a different system for handling the risk associated with depositing checks for the underbanked. It allows prepaid-card issuers to request a scan of the customer's driver's license with every check, a procedure designed to mimic the process of providing identification at a check-cashing store.
JPMorgan Chase offers mobile remote deposit capture for users of its Liquid prepaid card, though the card did not have this feature when it launched in June. The New York bank added check deposit when it added other mobile features in August. JPMorgan Chase does not make funds immediately available after checks are scanned, and the Liquid card's terms encourage users to also have a checking account with the bank. PreCash works with Chexar to handle the risk associated with providing instant funds.
"Risk is always top of mind," Taylor says. "We are relying on a very strong partner in Chexar to help us navigate through that risk and mitigate it as much as possible."
PreCash plans to add features to its mobile wallet over time. This year, it plans to support international bill payments and domestic prepaid top-ups. Next year, it will support international money transfers, among other features, including person-to-person payments.