Home / Money / Personal Finance /  To teach them early, fintechs take finance to teens

Pranjal Patel, a 10th standard student in Khandwa, Madhya Pradesh, is like any other 15-year-old: he loves online games and hanging out with friends. But that’s not all: he has been one of the early adopters of fintech startup FamPay’s prepaid card.

Patel is hooked. He not only uses the card to buy games and pay for mobile recharges but also to manage his expenses, saving a neat little amount every month.

Patel also uses the card at a neighbourhood Reliance Trends outlet, Amazon, Flipkart “and at local stores (using the UPI payment system) whenever we buy snacks and all that stuff".

He has been using FamPay ever since coming across an ad on YouTube in November. “I was the only one using it. But when I told my friends about my experience, they installed it. And now all my friends are using it. I have two sisters. We also have ordered separate FamCards for them." He spends 3,000-4,000 every month, which “includes mobile recharges for my family, pocket money, DTH recharges, WiFi recharges, and groceries—and games."

Patel is among Indian teenagers who are being targeted by apps with the idea of introducing them to cashless transactions.

The offer is a prepaid debit card but without the hassle of opening a bank account.

The global leader in the space is Atlanta-based Greenlight Financial Technology. Founded in 2014, it operates a money app for families and debit cards for kids and teens, helping young people develop financial skills. It serves over 3 million parents and kids who have collectively saved more than $140 million, it said.

In India, at least six startups operate in the kids’ fintech space, including FamPay, Junio, Pencilton, YPay, Visa-networked Walrus, a Y Combinator-backed company, and Yodaa, a product of Singapore-based Atlantis.

Firstpay Technologies’ Junio launched a proof-of-concept this February with 100 users. A full-fledged launch followed in March, but due to the second wave of the pandemic, user traction started only in May, June and July, when growth doubled each month.

As of mid-August, Junio had 250,000 registered users. Up to 80% of its user base is organically captured via word-of-mouth and referral campaigns, the company said. It now expects to reach 500,000 users or more within the next four-five months.

In March, Delhi-based Junio raised 15 crore in an angel round from the likes of Policybazaar chief executive officer Yashish Dahiya, Cred CEO Kunal Shah, BharatPe CEO Ashneer Grover, Groww CEO Lalit Keshre and InnoVen Capital India CEO Ashish Sharma. With about one year of cash runway remaining, the company is currently in talks to raise more funding. A physical Junio card, currently priced at 99, works on the RuPay network (recently migrated from Mastercard owing to Reserve Bank of India curbs on Mastercard), with RBL Bank as its issuer.

The Junio card provides parents with the option of introducing budget and category-based classification of monetary allowances every month and the creation of savings goals. “Post covid, digital familiarity and screentime have exponentially increased for children... Whenever content consumption increases, transactions are a natural corollary of that, and that is going to definitely explode," co-founder Shankar Nath said. Another co-founder is former Paytm senior executive Ankit Gera.

Bengaluru-based Fampay Solutions markets its prepaid cards to encourage kids to do digital transactions through a family friendly app. The company’s FamCards are issued through a partnership with IDFC First Bank.

The startup was born when IIT Roorkee graduates Sambhav Jain and Kush Taneja decided to collaborate on their second product. In 2018, the two had created a hostel mess app for students to plan their meal schedules through a common interface that reconnected to the university’s hostel management.

Students in universities and schools, the two realized, were largely dependent on on-demand and ad-hoc allocation of money from guardians, thereby losing out on savings skills. With quick surveys and conversations with teenagers, the co-founders realized students in Bengaluru couldn’t make essential purchases online without a parent helping them open bank accounts and provide OTP verifications.

“We were shocked that one of the most tech-savvy generations in India doesn’t have access to digital payments. Close to 40% of India’s population today is below 18 years of age," Jain said. Jain and Taneja took the same problem statement to Y Combinator in 2019, scored a cheque, and decided to launch their first product in April 2020.

With covid-19 lockdowns being imposed around then, they pivoted from an offline-focused solution to an online one and eventually rolled out the RuPay-enabled cards in August 2020. “What parents do is that they just send money to their kids’ FamPay accounts and kids end up doing all the grocery shopping for the homes," Jain added.

With a current tally of 2 million users, FamPay launched a second version late last month, which comes registered on the Visa network.

How much do these apps really help teenagers plan better?

“In school, the financial knowledge of compound interest and all that is just limited to the formulas. After installing FamPay, I got to know a lot of things like interest and budgeting. If you have your own account, then, of course, you will start saving," Patel said.

“I save around 500 to 600 a month. If we start counting cashbacks now, then it is more."

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