T-Mobile Launches Banking Service, Many Scratch Head in Confusion
By on January 22, 2014. 

T-Mobile Prepaid Card

T-Mobile announced today it wants to be your new bank. Sounds odd to you? It should. In a weird “you should really investigate further, but this is still an intriguing service” kind of way. But I’ve done the homework for you and broke it down in an easy to understand way.

What is it?

Through their newly launched “Mobile Money by T-Mobile” service, the company is now offering:

  • -A free bank account
  • -Low-fee prepaid Visa debit card
  • -Free ATM withdrawals at 42,000 ATM’s*
  • -Free card reloads at T-Mobile stores*
  • -No charge for card purchase*, activation, monthly maintenance*, lost/stolen card, overdraft, and no minimum balance requirement

(*Only available to existing T-Mobile customers)

How does it work?

This service is best described as a checking account without the checks or the bank.

Deposits are accepted fee-free at in a T-Mobile store, via direct deposit, or through mobile check scanning via their app for free. For a fee, customers can also buy “money packs” at various stores, reload at Visa ReadyLink retailers, or send money via MoneyGram.

Withdrawals can be done at 42,000 in-network ATMs without a fee, however the ATM owner can charge you their own fee. Outside of this network, you’re on your own, fee-wise.

Purchases can be made anywhere Visa is accepted, but you’re subject to the traditional debit card rules/drawbacks and could also be subject to particularly draconian prepaid debit card rules.

Bill payments can be made from this account.

Who’s Behind this?

T-Mobile joined with The Bancorp and Blackhawk Networks to offer this service.

T-Mobile is trying to brand itself as the “un-carrier” cell phone carrier. The one that’s “on your side.” As a value-oriented carrier, they know their customers are also value-conscious. By launching a bank account/prepaid card offering, they are targeting customers who are fed up with traditional banks and their fees.

Aditionally, T-Mobile is trying to go after the underbanked and unbanked. Essential, those who have left the traditional banking system or can’t/won’t effectively utilize banks. These are Americans who, typically, spend hundreds on check cashing services or those who simply don’t have a bank account.

The Bankcorp, a Deleware based bank, is not your traditional bank around the corner. They don’t have branches or tellers. Instead, they offer their bank as a platform for others to use (A.K.A. offering non-traditional bank services to affinity partners). They’re the safe holding your money in this situation.

Blackhawk Networks is a subsidiary of Safeway, the second largest supermarket chain in America. They administer all of the services with the card (manage the ATM network, man the customer service hotline, etc…). They’re also the administrators of the program.

In a funny way, you could argue that a grocery store is running a bank for a cell phone carrier. Weird.

Why should I get this?

  • -You’re the type of person that has very simple banking needs
  • -You don’t deposit cash often
  • -You receive a paycheck or government assistance and use check-cashing services (such as Walmart) because…
  • -You don’t have a bank account, or refused to get one
  • -You’ve been refused a checking or savings account

When and where can I get it?

Now. Either on the service’s website, in a T-Mobile Store, or at a Safeway grocery store starting in February 2014.

My Take

T-Mobile made an interesting, but not unprecedented, move by offering this banking service. It’s the right service to offer to their customer base, with massive benefits to them and very little downside from a business standpoint. T-Mobile’s only role is to license their name to the service, accept cash deposits in-store, and sell the service.

For consumers though, this may not be a good deal. Although the lack of fees can be a big benefit, the lack of certain consumer protections, actual checks, and a lack of local assistance could be a hindrance.  And some of the best features of this account are only available to existing T-Mobile customers.

Full-service checking accounts are still a better overall value for the numerous services they offer. But “Mobile Money by T-Mobile” offers an interesting alternative for a secondary bank account if you’re an existing T-Mobile customer.

 
Additional Resources & Notes
Bobby is creator and host of 2 Minute Finance. Check out the about page to learn more about Bobby.
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