Jan 26, 2013
With the rise of mobile platforms like Android and iOS, mobile payments have also become a necessity. Both Apple and Google are even expanding into the realm of mobile payments for real-world items, with Apple’s Passport and Google Wallet. Both systems support discounts and loyalty programs without the need for coupons and cards. Some cities are already supporting train and transit payments through the mobile phone itself.
But even with mobile banking on the rise, users will still need to support these with funds from an actual deposit account or a credit card, which makes it difficult for some individuals to purchase goods or pay for services without a funding source. This so-called “underbanked” sector is the target of a U.S.-based form called Green Dot, which has been offering co-branded card based products for some time now. Its latest product, GoBank, does away with a deposit account, but instead uses an account accessible through a smartphone app as your virtual source of funds.
GoBank does not have any brick-and-mortar building, nor any branches. But account holders can withdraw funds from more than 40,000 ATMs without any usage fees. Most of the other services will also be for free. There are no overdraft nor penalty fees. Accounts do not have a minimum maintaining balance and there are no monthly fees. There are fees and charges for only four services: use of out-of-network ATM, using the debit card abroad, adding a personal photo to the debit card, and membership fees. Account members can pay whatever they want for the membership fees.
As a bank, bank interaction and signup is through the smartphone app. With a smartphone, users can pay for internet and in-store purchases and send money via SMS or email. They can also take a glance at their bank balance without sigining in. GoBank can write up a check on the account holders behalf. Like Green Dot credit cards, account holders funds are linked to a Visa debit card account. Account holders will also have a debit card, and they can have a photograph on Facebook printed on it instead of a bank logo.
What’s interesting with GoBank is its potential for use in both emerging economies and developed nations. Whether you’re paying for your subway ticket, claiming perks and rewards, mobile banking might be the way to go in the future.
Internet banking has had quite a long history. Most banks, and credit card companies have their own customer portals where the client can check their balances, and transfer money from one account to another. However, as bank run enterprises, the operations of these internet banking services are tied with established banks. For most banking services, the client has to physically go to their bank and sign up or transact business. With GoBank, all bank transactions are done through the internet. Is cash on its way out as a preferred means of payment even for real-world goods?