MasterCard’s new product – a holistic digital platform that offers a range of “money management” capabilities, such as balance checking, budgeting, setting savings goals and near real-time payments to peers – has just launched in the US.
The US may not be about to embrace a new set of digital payments service directives such as those Europe faces, with the introduction of PSD2 on January 18th, but it’s encouraging to see that the region is preparing for a shift in the way that its population wants to bank.
There’s just one catch, however.
MasterCard Assemble, the name of the new product – perhaps because of its DIY connotations – comes with its own debit card, a mobile app, and, here’s the kicker, a prepaid account.
In other words, MasterCard is avoiding lending Assemble customers money – perhaps because the company does not think, and its analysis shows that today’s millennials are not in a position to pay it back.
The time was when consumers applied for credit cards in order to make certain purchases that they could not afford to pay outright. Back in the day, credit card companies felt that this was ok because the borrowers would eventually earn the money to pay off the debt, plus whatever interest the credit card company had decided to charge.
But it seems that where Millennials are concerned, credit card companies are no longer prepared to take that gamble. “Spend what you have”, they seem to be saying, and we will use technology to slice and dice your spending habits. So you can have lots of analysis about the funds that you do have, but no access to extra funds – even if you are prepared to pay interest.
Is it becoming harder for Millennials seeking credit? Some of the products on the market today seem to suggest that it is, and it does not seem fair. It’s not that banks don’t trust millennials, more that they do not see how millennials are going to come by the money to make credit cards work for them, and that is worrying.
“Prepaid is much more than just a way to safely store and use funds. It is a foundation to create new possibilities for consumers,” says Tom Cronin, senior vice president at MasterCard’s Global Prepaid Product Development and Innovation department.
But safe for who – for Millennials, or for the banks who do not wish to lend to them?
Besides viewing your spending habits in a variety of different and innovative ways, and placing curbs on your spending in order to save, what exactly are these “possibilities” that are mentioned.
They don’t include paying for a wedding, for example, on credit before paying the money back over time. Or to have a new kitchen installed in June, in anticipation of a Christmas bonus. These products can be useful, but they do not provide access to credit – are there enough Millennial focused financial products that do?
Cronin continues: “This technology enables our partners to deliver best-in-class digital experiences today, as we work to address additional segments such as gig economy workers and underserved consumers and micro businesses.”
It goes back to that phrase beloved of marketing bods, “if you don’t know what the product is, then you are the product”.
This is not a post criticising MasterCard. Far from it.
It is always good to see a finance company leveraging tech to provide customers with valuable insights – in this case spending habits, and real-time account views; and services – in this case peer-to-peer payments, and automatic savings tools – but are millennials truly satisfied with being the “prepaid” generation.
Is the limit of their expectations to become a Deliveroo rider or Uber driver with a prepaid account and no access to savings products, credit cards, and no ability to speculate to accumulate?
Sometimes, it feels that way. Living in a goldfish bowl, working all hours with few benefits, not having their workers’ rights recognised, whilst firms study their transparent spending habits to try to pitch them products that provide short-term gratification only. Faced with these circumstances, how can Millennials get ahead?
In truth, MasterCard intends to roll out its Assemble product to other demographics, too. But would it interest a baby-boomer, on a final salary pension plan, with a second home in France, to see how much per month they spent on candy, or to gather up their small change and sweep it into a savings account. They would likely feel patronised by such a product. Millennial just have to grin and bear it.
So, could it be time that millennials are given access to the same rights to speculate with their money, and take on debt with a view to being a little entrepreneurial making good long-term financial decisions.
Lets’ hope disruptive tech can be used to liberate people financially, and not just restrict them to prepaid products, with lots of bells and whistles on.
We don’t want to live in a financial world that says: you can have all the tech in the world, but none of the wealth.