4 min read.Updated: 17 Sep 2021, 12:47 AM ISTAnagh Pal
The apps prevent the risk of overspending, as parents are given the control to set limits
Learning about money can be a hands-on and fun experience. A bunch of fintechs are now developing products targeting pre-teens and teens, and some for the slightly older Gen Z aged between 15 and 24 years.
The idea behind these is simple. They aim to teach kids and young adults money management lessons that will come in handy when they grow up.
Under the hood: Fintechs such as YPay are issuing pre-paid cards linked to apps, and not to any bank account. “YPay card is a smarter and easier way for teenagers to make cashless transactions by also having parental control. To use the card, parents get their KYC done and log into the app and activate it. After that by using net banking, UPI, credit or debit card, they can top up," said Navneet Gupta, founder and chief executive officer (CEO) of YPay.
Similarly, Junio is a digital pocket money app for pre-teens and teens that serves as their own smart card for all online and offline expenses. “You can instantly top up the card using Junio app, and it’s ready for use by your little one," said Ankit Gera, co-founder, Junio.
Others, such as soon-to-be-launched Streak, issue prepaid cards, which are like wallets. “Parents can load money on the card and their children can transact as they wish, both online and offline, under their supervision," said Mitul Mehta, co-founder, Streak.
Children can use these cards to make online and offline payments. “Children can pay using scan, tap, swipe and pay online independently without having to ask their parents to input banking details or waiting for them to give them one-time passwords (OTPs)," said Sanjeev Pandey, managing director and CEO at Eroute Technologies Pvt. Ltd, which owns OmniCard.
Digital pocket money: Parents do not need to give their kids pocket money in cash. Mobile apps provide the option to set limits and track spending of their children. “When money is given to children via an app with limits set by the parents, they will spend wisely as they know their parents are being kept in the loop," said Gupta. Using the Junio app, parents can set tasks for children such as making their bed or watering the plants. For each activity, they put aside an amount that will be given to the kids only after they complete the task successfully. This is like incentivizing desired behaviour with bonuses.
Parents in charge: Parents need to keep a tab on how kids spend money. YPay allows parents to place a limit on expenses being met through the card. They also get real-time notifications of all transactions done using the YPay card. “The third and most worrying point is security. For this, we have created numberless cards. Hence, there is no chance of it getting misused," said Gupta.
Similarly, OmniCard has controls for parents aimed at getting children into the habit of responsible spending. According to Pandey, parents can control the overall spending limit of the kid’s card (below 18 years of age group). Being a guardian, they can also block the card if required.
Money lessons: By using these cards, kids can learn various valuable financial lessons such as financial accountability and budgeting from an early age. “When a child spends in cash, he or she often fails to keep track of his or her spending; But spending through a card always gives a clear picture of one’s expenditure. Upon analysing it, a child would know where he or she is splurging, and can control it; if not, as the next step, parents can guide, monitor or control their spending," said Gupta.
Pandey agreed. “It builds long-term finance management habits and teaches how to analyse one’s spending and spend responsibly," he said.
“Streak has the feature of helping your teen save money for their goals and also track their progress towards achieving them," said Mehta. For Junio, a feature called “goal" is under beta where the child can save for a big-ticket purchase from his or her pocket money.
“The child values such purchases much more as she has worked towards it, and also learnt some important concepts about money along the way," said Gera. Also, these cards have rewards built into them. When one spends with OmniCard, one is eligible for offers from partner brands. Similarly spending on the Streak card will help unlock coins which one can redeem to access curated offers. YPay offers cashback on favourite brands as well. It may be a concern that such rewards will make a child spend more, but that is also a part of the learning. “Even if they get a lot of cashbacks, parents get real-time information about the child’s expenses, putting a constraint for them to again spend smartly and wisely," said Gupta.
Teaching kids about money early would mean that good money habits stay with them for life.
“I think such apps are a good option for parents to give pocket money to their kids, since they can set limits and keep track of the spending and also link it to tasks. It gives parents more control on how their child is spending money as compared with cash or a debit card that is linked to their bank accounts," said Shweta Jain, certified financial planner and founder, Investography.