By Lee Boyce
|
The cashless society came a step closer today, with the launch of a service that offers a prepaid Visa card for children aged 8-16 and claims to be ‘pocket money for the digital age.’
PKTMNY allows parents to deposit money into an account for their children to then use a Visa card linked to it to withdraw money, use contactless payments in shops and buy items on the internet.
But it's improbable that most parents will take up Visa's offer to replace old-fashioned pocket money. There is a raft of fees and charges: a £5 one-off joining fee per family, and then a £1 monthly charge per child. So if you have two children, the first year would cost you £29 in charges.
All grown-up: Would you give your child a Visa card to make purchases and withdraw cash?
PKTMNY says this is to offset some of the banking costs.
All payments direct from your bank account are free of charge, but it has to be a standing order. Each time you add money to the account using a credit card there is a 1.21 per cent fee and for a debit card a 50p fee.
There is also a 50p fee for every time a withdrawal is made via a cash machine and £2 abroad. However, spending money in shops and online is free.
Parents can also have strict control on where kids spend the money, for instance only being allowed to use the card for shops on the High Street and putting blocks on cash withdrawals and internet purchases.
PKTMNY says the card cannot be used in pubs, bars, nightclubs and some restaurants, wine and beer wholesalers, cigar and tobacco shops, escort services and massage parlours, automated fuel dispensers, race tracks and adult entertainment venues, websites or TV channels.
The card is also contactless. This may concern some parents, as if the card is stolen, purchases under £15 made in shops that accept contactless payments can be made without a PIN number – although, irregular activity will block the card if a series of purchases are made near each other.
'DOESN'T HELP ME TEACH MY DAUGHTER ABOUT THE VALUE OF MONEY'
Comment by This is Money's Richard Browning.
PKTMNY, if you can get your head around the incomprehensible-looking name, is a great idea.
In theory.
In practise, it is of no use to my daughter or to my efforts in teaching her about the value of money and the best ways to manage it.
At the moment she mostly uses cash to spend with her friends.
The PKTMNY card charges 50p to withdraw cash - every time. A 10 per cent charge to access her £5 a week pocket money is not the best deal on the market. It’s possibly the worst.
There is also a sign up fee.
There is also a monthly fee.
How can a responsible parent teaching a child, who earns less than the minimum hourly wage a week, see that this is a good idea?
I pay my daughter’s pocket money into a Metro Bank account that I control but she can check the balance, withdraw cash for FREE and buy stuff in shops. The account is available for children from their 11th birthday.
In theory she cannot go overdrawn but it is possible, say the bank, to accidentally overspend in a shop.
For this reason I placed a £100 buffer in the account and she is under strict instructions never to allow the balance to fall below that £100.
If she does, the card will be confiscated for three weeks by her dad and no pocket money will be paid. Just like a bank. Banks are thieves; this is an important lesson.
It’s perhaps not the best account because sometimes the card has been inexplicably refused at ATMs and even at shops where the MasterCard logo is displayed – and the branch it promised to open in town this year has yet to materialise.
But I hope - and so far so good - she’s learning to use a debit card responsibly. I suppose one might argue that she’s using it in the same way she would a prepaid card such as the one provided by PKTMNY but in the real world we mostly use proper debit cards.
One interesting feature of PKTMNY is that you can assign money-earning tasks to your child and assign payments.
But again back in the real world who has time to log in to yet another website to do this?
If my daughter wants to earn extra money by washing the car, I’ll ask her.
There is also the issue of the funds not being protected under the Financial Services Compensation Scheme (FSCS).
We asked a spokesman whether it is protected, and he said: ‘In terms of the deposit protection, the PKTMNY service utilises e-money which comes under the European payment services directive and is regulated in the UK by the FSA and in Gibraltar the FSC.
‘As our partner bank is in Gibraltar, PKTMNY accounts are regulated by the FSC. The e-money directive specifies that customers’ funds can be protected by either placing them, or specified assets in which they are invested, in a segregated account or accounts or by holding an insurance policy or bank guarantee.
‘In the case of PKTMNY customers money is protected by being placed in a segregated customer funds account with NatWest Bank in accordance with the directives rules. The FSCS does not protect e-money which includes money on pre-paid cards. This is because e-money does not satisfy the definition of a “deposit” and so is not within the scope of FSCS protection.’
If there is not enough money in the account for a transaction your child is attempting to make, the transaction will be refused when the retailer seeks authorisation.
It says that on rare occasions a retailer may fail to seek authorisation for a transaction, and may take the account into a negative balance.
It adds that your child must not attempt to spend over the funds loaded onto the card and if they do, you as a parent must repay any excess immediately. If you fail to do this, it reserves the right to use a debt collection agency and legal remedy to recover the funds.
The maximum account balance is £6,000, with a three-load limit a day, up to the value of £500. The maximum that can be spent on the card is £4,000 and a limit of ten transactions, while no more than £120 can be withdrawn from a cash point a day.
There is also a £5 fee if the card needs replacing or if it is stolen, lost or damaged.
PKTMNY also has a shop which is run with online retailers such as Hamley’s, New Look, Superdry and Zavvi – however, many of the goods and products on the website can be found cheaper on other online retailers or even high street shops.
MY VERDICT: IT IS ALL 'TOO MUCH TOO YOUNG'
Comment by savings and banking correspondent Lee Boyce
Part of me thinks this is a good idea, the other part me thinks it’s a bad idea
Let’s start with the good. It teaches the children the importance of money and budgeting – having an online account is an easier way to see how much money they may have.
Also, at least the fees and charges will let them see how much money could be eaten up in later life if they don’t make the right financial decisions.
It also gives kids – especially teens – the chance to go into town with their friends without cash on them, and can make them feel a little more grown up using a cash machine.
But this leads me onto the bad points. First off, those monthly fees and the one-off fee. I understand that providing the service will come at a cost for PKTMNY, but there are no fees when it comes to the old-fashioned method of giving cash, or as Richard Browning mentions above, Metro Bank.
Also, pocket money for me is about children earning little bits of money here and there - for instance, giving them a couple of quid for doing the washing-up or other chores.
Unfortunately, you couldn’t put small amounts into their prepaid account cost-effectively because of the 50p debit card fee – and also, cash withdrawals are charged, which eats into even more money.
Lastly is the age-old issue of ‘too much too young’. I don’t have children, but the thought of an eight-year-old having a Visa card and having to think about budgeting is a push too far. When I was eight, I’d be happy with 50p to go down my local newsagent and get some sweets - I couldn't imagine the newsagents face if a small child pulled out a Visa card to use.
Do we really want to saddle children with the burden of all that money planning at that age? I think not and in my opinion, it means the account is for those aged over 13 and with parents that give a little bit more than most and will see the account fees as ‘insignificant’.
No comments:
Post a Comment