Slashdot Mirror
T-Mobile Jumping Into the Check-Cashing Industry
An anonymous reader writes "T-Mobile has made headlines recently for trying to change the cellphone industry's reliance on contracts that lock customers into a particular carrier. Perhaps surprisingly, they've been fairly successful. Now, they're jumping into another industry plagued by high, customer-unfriendly fees: check cashing. 'Specifically, T-Mobile is hoping to offer an alternative for the 70 million or so U.S. adults that either have no bank account or have some bank services but still rely somewhat on check-cashing or payday-loan services.' How will they do it? 'Through the combination of a smartphone and a prepaid Visa debit card, T-Mobile (and its banking partner, Bancor) aims to offer many of the services typically offered through a bank, including check cashing, direct deposit and bill pay. The service, dubbed Mobile Money, allows customers to purchase and reload the card at more than 3,000 T-Mobile stores and, eventually, at Safeway and other retail stores. They can use the card anywhere Visa is accepted, and can also withdraw money, without a fee, at 42,000 ATMs across the country. Mobile Money customers can enroll in direct deposit for payroll, and personal checks and other types of checks can also be deposited by taking a picture of the check using the smartphone's camera.'"
Some people have done soo many bad things that they can't get a pay for banking account.
The alternative to that is they don't want their money laying about where certain govt. agencies can remove it and deposit it elsewhere, such as the ex-wife's bank account.
Suborbital [spaceflight] is the special olympics of spaceflight. - Rei
Most banks have gotten to the point that they only offer free checking if you use direct deposit. If you deal mostly in cash or work for a small company that cuts paper payroll checks, you're not left with a lot of free options.
Clearly T-Mobile will make some additional money by doing this. But bravo! Talk about an industry that preys on the most vulnerable. We have a local check cashing company that goes by the name 'RobCo'. No kidding (I guess the owners name is Rob). You couldn't find a more appropriate name.
Look at the economy. Where is it compared to years prior? Where is it going? The poor are increasing in numbers for a wide variety of reasons. They are *the* growing market. To not find a way to serve them would be ridiculous.
The European banking system (T-Mobile originates in Germany) is highly competitive. Checks basically don't exist anymore. You can still use them, but nobody wants to, because the alternatives are much more comfortable and reliable. I can only imagine that the people at T-Mobile are constantly thinking "WTF? Does nobody realize how unnecessarily complicated and expensive banking is in this country? Why isn't anybody doing something about it? Maybe we should do something about it."
Checks in the mail. Seriously, folks?
There are a huge humber of people in the US who are simply unable to get a bank account. As far as the banking system is concerned, they do not exist. Ever see the movie, Elysium? It's like that.
It is tough to see when one is a privileged rich kid. I only learned about it when I picked up an interest in bitcoin and heard someone speak about what it meant for the poor to be able to hold wealth without a bank account and without having to carry cash.
I'd be less cynical in this particular case: it looks like a genuinely innovative bit of middle-man work, which could serve its target audience better than the current solutions. (If it doesn't, it will of course fail.)
PayPal was an innovation at the time it was new, and served its users better than anything else out there. T-Mobile's new idea looks similar: it aims to serve customers in a way banks are for some reason reluctant or unable to do.
There is a place in the world for these 'middle-men' roles.
Check cashing is there for undocumented people (who can't provide the basic information to get an account, but are occasionally paid by check). I actually used to work for a bank (one of the larger US ones) that owned a Check Cashing business and they used to send someone out to the day laborer sites on paydays to facilitate the process.
It's about as predatory of a practice as you can get and even the company that owned these check cashing locations knew that it was scuzzy. I remember getting a vibe when working with the head of the check cashing organization that he'd been breaking legs in a former profession.
Maybe T-Mobile can do this right, but it's an industry built on taking advantage of the fact that someone can't use a free service. I don't see how it could be possible to do it right.
In the US, most banks have free checking accounts
Citation needed.
I haven't seen a free checking account in ages. Some of them can be free, if you meet certain qualifications, but I seriously doubt there's any truly free ones out there any more. At the very least, they usually have a minimum balance requirement; at my bank, it's $100 for their lowest-level checking account. If you drop below that at any point, they sock you with fees. Poor people can't handle an account like that because they won't be able to keep up the minimum balance; at some point, they'll need the money NOW and their balance will drop, and that $8 fee will really hurt them. That's why they're called "poor": they can't afford an $8 service fee every month because some multibillion dollar bank wants fees on top of the interest they get for holding peoples' money.
It wasn't always like this. Back in the 80s (a much better time than now, in most respects), bank accounts were usually free, had good interest rates, and there were no fees for almost anything. Even though ATMs were brand-new technology, they were really reliable (no BSODs then), AND you could use other banks' ATMs, without a fee!
Since it would seem that most /. folks are unaware, allow me to explain exactly why many folks don't have bank accounts -- it's simply that due to onerous fees, if/once someone makes a mistake, their existing bank piles on miles of crap fees until such time as the account, through little to no direct action of the customer, ends up irreparably into a negative balance; one of my own employees went negative by about $20, and within 3 months, through no further action by him, he was told his account was something like -($200.00). While this might be a simple problem in a pure competitive capitalistic system, aka GO TO A COMPETING BANK AND SAY THE HELL WITH THE BOGUS FEES, nowadays the banks prevent this by sharing the information -- so if you screw up at one bank you are truly blacklisted at ALL OF THEM, regardless of the legitimacy of the original infraction. Anymore, my understanding is that ALL BANKS are tied into this database, and it's private, and not regulated like the credit reporting system.
For more reading enjoyment, I found this:
http://dealbook.nytimes.com/2013/07/30/over-a-million-are-denied-bank-accounts-for-past-errors/?_php=true&_type=blogs&_r=0
Mobile banking is pretty common in Africa for the same reasons T-Mobile is highlighting. Low barrier to entry and with a couple of partnerships with existing brick and mortar shops to act as physical banks you have a bank that is easily more accessible than the traditional banks.
References
EcoCash Zimbabwe
M-Pesa - Wikipedia
Most community banks and credit unions have true free checking accounts.
http://www.nerdwallet.com/blog...
Commercial banks, not so much.
The problem is at least as much with bank location as it is the availability of free checking.
To paraphrase Willie Sutton, banks go where the money is.
Check out some credit unions. I think mine required a $5 buy-in/minimum deposit or something silly like that. The only fee I've ever paid (10+ years) was for my mortgage application. The catch is they don't have 3 branches in every single town throughout the US...which doesn't matter if you're poor and don't travel or rarely need a teller (like me).
The banking industry of the 80's was a mess. The prime rate hit the highest ever of 21.5% and averaged around 15% for the decade (currently 3.25% for reference). It's no wonder they could pay a few % interest on accounts and still make plenty of money of loans without fees. Even at the lowest, the prime rate was 3x what it is today. Plus the deregulation of banking led to all kinds of nasty things. Most people forget how many banks failed in the early 80's and how many new ones popped up. The FDIC spent a ton of money (especially for the time) refunding deposits from failed banks.
Personally I'd rather a $8 fee than a 15% prime rate. Granted the poor are still taken advantage of and also wind up paying much higher interest rates...but that's a more complex socioeconomic issue. It's not just greedy banks.
A different issue though - the amount of background checking a bank does to open a simple check account. I declined and walked out a few years back when I realized what they were asking of me and asking me to sign - especially when they refused to let me have a copy of some of the paperwork I was told I had to sign.
You can get rich if you own a politician, but you have to be rich to buy one in the first place.
Checking accounts are not cheap for a bank to run. I know something about this because I am a member of a credit union, and, being a finance nerd, looked through their books. It is pretty likely that even at $8 per month in fees, a bank would actually be subsidizing a depositor if they didn't also have an account besides checking. The reason that banks were willing to offer large subsidies for checking, ATM use, etc. in the 80's was because it was easier to create lock-in. If you had a checking account and ATM card at a bank, you were pretty likely to also get a savings account, CD, and mortgage from the same bank - you might even be interested in insurance or brokerage services. Banks were willing to swallow the non-trivial costs of offering free checking because they were, essentially, marketing expenses. Also, it should be mentioned that it wasn't quite as expensive before 9-11, since "Know-your-customer" and other anti-terrorism measures didn't exist. Now, it's much easier for customers to comparison shop, especially for CD rates and insurance prices, so it's not as viable for banks to rely on cross-selling.
setting up direct deposit is a pain in the ass: fill out a paper form, search around for routing and account numbers. The payroll department ...
Couldn't all of this be taken care of with a single, one-time, QR code, generated on-demand by you (or, actually, by you bank's online or mobile access application) and given directly to HR, who then simply passes it on to the payroll processor?
If only!
When setting up new job direct deposit in 2008 and another in 2012 they BOTH insisted not only on a paper form, but on a voided paper check attached to it! Uh, I use a bill pay service, I don't write my own checks. I don't know if it was HR/payroll department requirement or the payroll processor (don't remember who it was for the 2008 company, but currently it is ADP, talk about stuck in the dark ages...).
I'm just glad that everything else will accept my routing and account numbers without the paper check. For example, on a mortgage refi closing they offered me an annual rebate if I agreed to let them direct draft payments from my account. They wanted a paper check. When I didn't have one, they told me I could wait until the closing was processed and the mortgage showed up on the website, and I could sign up there for automatic payments.
But I am getting heartily sick of having to sign and return paper forms! A few places allow fax, and a very few allow scan and email for anything with legal implications. Where is my legally recognized digital signature???
Hello, 1.5 decades ago was the turn of the 21st century, not the 20th...
But if you don't have a bank, how can you establish a banking record? Once you get to a certain age, it becomes a Catch-22. Can't bank because don't have credit record. Don't have credit record because can't use bank.
You show up in the bank with some money and tell them that you want to make a deposit. Couple of hundred bucks would do it. Banks love money. If on the other hand you show up with no money and ask for a credit, well than this is a different story. Did I say that banks love money?
Can you imagine buying a house with your credit card, and running that balance for decades? That's what it was like -- so be careful what you wish for when pining for the 80s, especially regarding interest rates.
I realize the interest rates were high back then, but house prices also weren't grossly inflated by speculation and a bubble back then the way they are now. Also, the credit card comparison isn't quite fair: yes, the interest rates were high, but mortgage interest has always been simple interest, not compounded as it is with credit cards.
The first thing that comes to mind is illegal immigrants. Some other people on this thread have mentioned criminal records. Then there's welfare. You start to lose benefits if you have too much money in the bank. It's a pathetic amount like $2000. There's no way you can dig yourself out of the welfare trap with $2000 if you lose your $500/mo EBT because of that. So. Cash the check, buy some bling. That's your real savings. The poor who do this are acting as perfectly rational economic actors. If you want to at least partially kill this industry, don't start using assets as a test for benefits until they have enough savings to last them 2 years on their own, and then taper the benefits instead of ending them all at once. In fact, the benefits need to be constructed in such a way that obtaining a job or getting a raise doesn't result in a reduction to net income. That would go a long way towards getting people off welfare programs.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Seriously, if you are so far above the line that this occurs at that no one you know falls below it, you are a hell of a lot better off than you think.
The problem with middle class is for some reason they seem to think that is what poor is, and cannot conceive of someone worse of than them.
I started off poor. I grew up moving from eviction to eviction. bank accounts were simply not an option for my mother, she had floated checks to try and stave off evictions. We went hungry often. A night with no food, or maybe a package of crackers to share, was common- at least once a week, and often more.
The road up from there is steep, and many do not make the climb. College was not an option- too poor to afford it, not poor or minority enough to get scholarships. Grants that were available would not cut it- and the aforementioned poverty and evictions meant no student loans for us. Constant moving meant a school history that does not bring the scholarships flocking. Sports? Who has time to excel at sports when finding supper is the priority? The military was my only hope, and even that was iffy - could I get a training that will translate to decent civilian jobs? (spoiler- I did.)
I am middle class now- upper middle to be honest-, but that was a very gradual climb taking over 20 years.
But I do recognize how far I have climbed and DO understand the people still struggling at the bottom are not there because they are lazy bums.
Chase can suck my balls. They will never get another red cent of mine. When my wife and I were both laid off I called all my credit card companies asking to be put on a payoff plan, at a reduced interest rate. Every company I called was happy to do so except Chase. Even Sears, with their higher nominal base rate, dropped their rate to 6%. Chase simply stated that if I didn't make the minimum payments they would send me to collections. Luckily, thanks to everyone else helping out and the fact that at least I was able to quickly find work I was able to completely eliminate my credit card debt in under 5 years. If everyone had behaved like Chase, I would have simply declared bankruptcy and screwed every creditor over. I wouldn't have had a choice. Fuckers
So, your solution to someone being "unbanked" is to use services, which charge a monthly fee, that are provided by Chase, which happens to be a bank. Maybe I'm missing something.
A car is a necessity for having a job in much of the country.
But that's the neat thing about being a Social Darwinist. You get to sneer at the poor applying for food stamps because they should get off their lazy asses and get a (second) job to pay for food and housing. But when they buy an 87 Escort, because they have to have transportation to get that job and that was the best car they could afford.....
......you get to sneer at them a second time for having a "luxury item" when they get hit with a $200 repair bill!
"Undocumented" is just a modern euphemism for "illegal." If you are here legally, then you have documentation because you applied for it and received it before entering the country. If you don't have it on you because you lost it, you can request new documentation from the government. There is no bootstrapping necessary.
If you are illegal, you are not supposed to be in the country. You have no grounds on which to complain that the country's laws and customs are not friendly to your illegal status.
BS cop out. Pretty much every country at some point in its history had invasion or colonization providing a portion of the modern inhabitants.
Of course, I'm also a descendant of the "invadees" so I have every right. However, when I did work in a foreign country, I had enough respect for them to apply for a work visa. When I brought foreign citizen family back, I also complied with the laws. I have an exemption from your BS and double grounds to complain about illegals.