Light Reading
New Mobile Money service lets those that don't have a bank account pay bills with a T-Mobile-backed Visa card.

T-Mobile: The Uncarrier for the Unbanked?

Sarah Thomas
1/22/2014
50%
50%

T-Mobile isn't intent on just shaking up the wireless industry; now it has its sights set on the banking industry as well.

The self-proclaimed 'uncarrier' unveiled a new Mobile Money service on Wednesday that it says will go nationwide after a trial in Miami that started in November. Unlike T-Mobile US Inc. 's Isis venture, Mobile Money is designed for those that don't have a bank account, letting them access their money and make payments via a T-Mobile-supported prepaid Visa debit card and a mobile app. They can use the app to take a picture of a check and load it on to the prepaid card, which they can then use for payments.

T-Mobile is going after the 8.2% of US households, or 17 million adults, that don't have a bank account, according to the latest FDIC data. Jan Dawson, chief analyst at Jackdaw Research, notes that the service is a good fit for T-Mobile's prepaid customer base, which is more likely to fit with this segment of the population than the big three carriers' contracted customers.

But, he notes, the challenge will be short-term revenue for T-Mobile as the service is free to its customers (though others will have to pay a fee). He said the service is another marketing effort from T-Mobile that will cost it money, at least until it tacks on other services to it.

Why this matters
T-Mobile has so far been shaking up the industry in its core tenets: service plans, devices, and data pricing. Now, it's trying its hand at service innovation, something operators haven't traditionally excelled at. According to Dawson, Mobile Money is the first sign that T-Mobile is interested in going beyond the traditional wireless services business.

"It fits nicely with T-Mobile's branding as a friend of the consumer and a company that does things differently, and the service should provide significant value to people who struggle to qualify for traditional bank accounts," Dawson writes in a research note.

Its announcement follows AT&T Inc. (NYSE: T)'s mCommerce play, announced last week to take on Square mobile payments. Both carriers are also involved in the Isis joint venture, which provides a full mobile payments and wallet service, but has struggled to find traction in the US. T-Mobile's focus on the unbanked may make this venture more successful. Services outside of the US that have addressed this population have been well received, but it's so far been an untapped demographic for US carriers. (See AT&T Offers a Square mCommerce Competitor.)

Related posts:

— Sarah Reedy, Senior Editor, Light Reading

(10)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
DanJones
50%
50%
DanJones,
User Rank: Blogger
1/22/2014 | 5:05:05 PM
Re: Increasing competition
It just has to be less than the check cashing places and payday loan stores. There's one on the corner down from my apartment, I can go and check what they charge soon.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/22/2014 | 5:01:49 PM
Re: Increasing competition
Good point on the position of their retail locations. Same with MetroPCS, which T-Mo now owns. The proximity is good for the demographic they would be reaching with this. Of all the carriers, it has the best shot at success.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/22/2014 | 5:00:35 PM
Re: Increasing competition
I wonder how much T-Mo is going to charge non-customers to use it. It must be hoping to make back some of its investment with non-customers since it's free to users. That's why new services have to be forthcoming too.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/22/2014 | 4:59:44 PM
Re: TMo Bank
Become Macklemore's official sponsor, so he only wears Magenta at concerts? :)
DanJones
50%
50%
DanJones,
User Rank: Blogger
1/22/2014 | 3:55:40 PM
Re: Increasing competition
Dennis,

I could see people taking this up if they advertise it heavily. The T-Mobile stores are often close to the check cashing places in parts of Brooklyn, if its cheaper than doing that I can see people switching but yeah definitely a competitive business.

Certainly an interesting idea for a carrier to try.
mendyk
50%
50%
mendyk,
User Rank: Light Sabre
1/22/2014 | 3:34:18 PM
Re: Increasing competition
The issue with mobile payments is the scale needed to get to any significant revenue. You need to be able to handle millions of transactions to see thousands of dollars. Early movers in developing economies (where the percentage of people without bank accounts is significant) have done well, but growing competition from different types of players is already making those businesses less profitable. It's a nice idea with real populist appeal, but prospects for long-term success are weak.
@jopocop
50%
50%
@jopocop,
User Rank: Moderator
1/22/2014 | 3:25:29 PM
TMo Bank
When I saw the news, I clapped over the brilliance of John Legere to come up with this kind of collateral business.  I wonder what more tricks is he going to do, such as open up a McD or Starbucks in his TMo stores?  Could work...
DanJones
50%
50%
DanJones,
User Rank: Blogger
1/22/2014 | 3:04:05 PM
Re: Increasing competition
It makes sense given how popular payday loans places are in the US and how quickly similar schemes have grown in other countries. I'm sure financial analysts might look dimly at the move though.
Phil_Britt
50%
50%
Phil_Britt,
User Rank: Light Sabre
1/22/2014 | 11:56:39 AM
Increasing competition
This could be a good move for T-Mobile, but the company might find it costly to provide this service. Others are lowering their fees for prepaid debit cards or getting into the business for the first time, so costs for consumers are getting more reasonable.

Of course the others still charge more than T-Mobile, but even the competitors find the service only marginally profitable. Not sure a loss leader like this is in T-Mobile's best interest, and unsure if Softbank would be interested in this extra expense if it moves forward in trying to merge T-Mobille and Sprint.
SarahReedy
50%
50%
SarahReedy,
User Rank: Blogger
1/22/2014 | 11:56:12 AM
Competition
T-Mobile will have other competition on this (Wal-Mart + American Express) outside of just carriers, but the fact that it's free to its customers should be a big boon. It didn't say what it's charging non-customers though. As Jan mentioned, it could and likely will attach other revenue-generating services to it in the future, making it more of a complete Wallet that it can make money from. 
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Huawei Video Resource Center
Dr. Dong Sun Talks About Carriers' Digital Transformation & Huawei’s Telco OS

1|29|15   |   6:28   |   (0) comments


Dr. Dong Sun, Chief Architect of Digital Transformation Solutions at Huawei, discusses how telecom operators can become digital ecosystem enablers and deliver optimal user experiences that are in real-time, on-demand, all-online, DIY and social (ROADS).
LRTV Huawei Video Resource Center
Huawei's Chief Network Architect Talks about Network Experience & Operators’ Strategies

1|29|15   |   3:39   |   (0) comments


In the digital age, network experience has become the primary productivity especially for telecom operators. In this video, Wenshuan Dang, Huawei’s Chief Network Architect, discusses how carriers can tackle the challenge of infrastructure complexity in order to enhance business agility and improve user experience.
LRTV Documentaries
The Rise of Virtual CPE

1|27|15   |   01:38   |   (5) comments


As NFV strategies evolve from tests and trials to production telco networks, expect to hear a lot about virtual CPE (customer premises equipment) rollouts during 2015.
LRTV Documentaries
Optical Is Hot in 2015

1|23|15   |   01:56   |   (2) comments


Optical comms technology underpins the whole communications sector and there are some really hot trends set for 2015.
LRTV Custom TV
Policy Control in the Fast Lane

1|22|15   |   2:57   |   (0) comments


What's making policy control strategic in 2015 and beyond? Amdocs talks with Heavy Reading's Graham Finnie about the key factors driving change in the data services landscape. Find out what his policy management research reveals about the road ahead for policy control – and sign up for
LRTV Documentaries
Highlights From the 2020 Vision Executive Summit

1|21|15   |   4:33   |   (2) comments


In December 2014, Light Reading brought together telecom executives in Reykjavik, Iceland to discuss their vision for high-capacity networks through the end of the decade. The intimate, interactive meeting was set against the backdrop of Iceland's spectacular natural beauty. As one of the event's founding sponsors, Cisco's Doug Webster shared his company's ...
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Harmonic, Helping Carriers Accelerate 4K Video Deployment with Huawei

1|20|15   |   5:42   |   (1) comment


At IBC, Peter Alexander, Senior Vice President & CMO at Harmonic, speaks about the growing interest in pay-TV service and its branching into multiple devices.
LRTV Huawei Video Resource Center
Sony Marketing Director Olivier Bovis Discusses the Outlook for 4K and Cooperation With Huawei at IBC 2014

1|20|15   |   6:50   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Huawei Pay-TV Partner Envivio, Helping Carriers Accelerate 4K Video Deployment

1|20|15   |   2:57   |   (0) comments


At IBC, Olivier Bovis, Marketing Director of Sony, speaks about the coming of the 4K era.
LRTV Huawei Video Resource Center
Pay-TV's Networked Future

1|20|15   |   6:29   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about the future of the pay-TV industry and its transition.
LRTV Huawei Video Resource Center
Jeff Heynen: Distributed Access Will Help MSOs Compete in the Future

1|20|15   |   2:26   |   (0) comments


At IBC, Jeff Heynen, Principal Analyst at Infonetics, speaks about moving to distributed access and the future trend of cable business.
LRTV Interviews
Cisco Talks Transformation

1|20|15   |   13:02   |   (0) comments


In December 2014, Steve Saunders sat down with Cisco VP of Products & Solutions Marketing Doug Webster at Light Reading's 2020 Vision executive summit in Reykjavik, Iceland. They spoke about Cisco's approach to network virtualization as well as how service providers can begin to monetize high-capacity networks through the end of the decade.
Upcoming Live Events
February 5, 2015, Washington, DC
February 19, 2015, The Fairmont San Jose, San Jose, CA
March 17, 2015, The Cable Center, Denver, CO
April 14, 2015, The Westin Times Square, New York City, NY
May 12, 2015, Grand Hyatt, Denver, CO
May 13-14, 2015, The Westin Peachtree, Atlanta, GA
June 8, 2015, Chicago, IL
June 9-10, 2015, Chicago, IL
June 9, 2015, Chicago, IL
September 9-10, 2015, The Westin Galleria Dallas, Dallas, TX
September 29-30, 2015, The Westin Grand Müchen, Munich, Germany
November 11-12, 2015, The Westin Peachtree Plaza, Atlanta, GA
December 1, 2015, The Westin Times Square, New York City
December 2-3, 2015, The Westin Times Square, New York City
Infographics
Hot Topics
Google Continues Gigabit Expansion
Jason Meyers, Senior Editor, Gigabit Cities/IoT, 1/27/2015
Comcast Apologizes to 'A**hole' Brown
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/29/2015
Cablevision's New WiFi Try – Freewheeling Enough?
Mari Silbey, Independent Technology Editor, 1/26/2015
Overture Builds on NFV Foundation
Mitch Wagner, West Coast Bureau Chief, Light Reading, 1/27/2015
Bumper iPhone Sales Boost Apple Profits
Iain Morris, News Editor, 1/28/2015
Like Us on Facebook
Twitter Feed
Webinar Archive
BETWEEN THE CEOs - Weekly Executive Interview
Join us live for Light Reading's interview with Jay Samit, the newly appointed CEO of publicly traded SeaChange International Inc. With a resume that includes Sony, EMI, and Universal, Samit brings a reputation as an entrepreneur and a disruptor to his new role at the video solutions company. Hear what he has to say about the opportunities in video, as well as the outlook for cable, telco, OTT and mobile service providers.