Pocket money is taking on a digital form with a new breed of fintechs taking over the piggy bank. But they are more expensive than standard children’s banking products.
ZAAP is a prepaid MasterCard and Spriggy a prepaid Visa. They both aim to help children learn financial responsibility and money management skills through accompanying smart phone apps for children and their supervising parents.
ZAAP and Spriggy have features such as spending restrictions, real time notifications of purchases, the ability to set savings goals on the app and, because they are prepaid, only the money on the card can be spent.
Peter Crellen, chief marketing officer at Spriggy says that Spriggy is independent of the banks and is focused on delivering the best service to teach kids about money in the digital age.
However, both ZAAP and Spriggy charge account fees, have reload limits and do not accrue interest on balances.
Spriggy’s annual fee is $30 per card and ZAAP carries a $2 monthly fee per card.
Crellen says: “We charge a simple and honest fee for our service that families feel they can’t get elsewhere. Since we launched two years ago, over 100,000 Australian families have found great value in Spriggy.”
Commonwealth Bank has the same offering with its Youthsaver and its accompanying transaction account, the Smart Access Account. Both have no fees attached to the account and the Youthsaver accrues up to 1.85 per cent interest.
Scott Pape, aka The Barefoot Investor, is not a fan of prepaid cards for children as he believes they are too expensive.
Pape says: “Of course, eventually your tween will need a bank account. When that time comes, you should challenge them to choose a no-fee high interest rate account (rather than paying $30 a year for a glorified app).”
ZAAP and Spriggy’s apps give parents the ability to monitor their child’s spending by controlling the funding to their account. Children cannot spend more than what is loaded on the facility.
The CommBank Youth app has the same functionality, which allows for parental spend controls, lock contactless card payments and or online payments.
Westpac’s Bump Savings has similar features, including a parental control feature allowing the parent to decide how much account access they would like for their child.
The app also includes personalised savings goals. This account can be used in conjunction with Westpac’s Choice transaction account.
Spriggy’s Crellen says: “In choosing Spriggy over a bank account, families can set jobs for their kids, create unlimited visual savings goals, feel safe with card spending restrictions, receive real-time spending notifications for parents and give their children responsibility with a kid-friendly app of their own.”
Blake Edwards, product marketing manager, prepaid at Zenith Payments (the owner of ZAAP) says ZAAP is not a replacement to a bank account.
Edwards says: “It’s a completely parent-controlled incubator, enabling parents to teach their children good earning, saving and spending habits before they enter a world of credit and other higher risk products.”
ANZ and NAB do not offer specific youth products however, ANZ Progress Saver can earn up to 1.60 per cent interest. NAB offers its Classic Banking account, iSaver and Reward Saver to youths. NAB’s reward saver can earn up to 1.61 per cent.
Both ZAAP and Spriggy’s apps offer the ability for users to set up and track savings goals.
Parents can manage multiple children’s accounts with Spriggy’s ‘Parent Wallet’ and ZAAP’s ‘Parent ZAAP’ as well as topping up with an externally linked debit or credit card which can then be transferred to the child’s account manually or recurringly.
Unlike ZAAP, Spriggy’s app features ‘Spriggy Jobs’ which allows parents to set up regular or one-off chores that can be paid or unpaid at the parents’ discretion.
Spriggy can also be used to withdraw cash at ATMs with a daily withdrawal limit of $250. This can be changed if Spriggy requires or if the parent requests that a lower daily limit apply. ZAAP does not have this functionality.
Zenith’s Edwards says: “With debit cards, children can withdraw cash at ATMs with debit cards and spend it on things they aren’t supposed to. You can’t withdraw cash on ZAAP.”
ZAAP consists of a prepaid card and a small payment chip that can be inserted into a wearable wristband or an existing watch or fitness tracker. Unlike Spriggy, the transfers to ZAAP are instant.
Transfers to Spriggy and within Spriggy are also instant. A small percentage of members elect to transfer funds from bank accounts and this does take longer.
Children’s money is currently a contentious issue, with Australian Securities and Investment Commission (ASIC) currently undertaking a review of school banking programs.
ASIC commissioner Sean Hughes says: “It is important for ASIC to understand the range and extent of impacts that school banking programs can have on students, parents and school communities, as part of our responsibility to ensure the financial sector is delivering for all Australians, and especially for future generations of financial consumers.”
- 30 day free trial followed by a $30 annual fee per prepaid card;
- Prepaid card limit of $999 with an annual load limit of $10,000;
- Prepaid Cards will be set with a $250 Daily ATM Limit unless Spriggy requires or the parent requests that a lower daily limit apply;
- $10 minimum deposit;
- 3.5 per cent overseas purchase fee; and
- Free reload.
- Monthly account fee per card of $2;
- Reload fee on debit or credit card transfers to Parent Wallet is 1.5 per cent of load value;
- Weekly card reload limit of $999;
- 1.5 per cent reload fee;
- $10 card or account closure fee and additional $2 inactivity fee; and
- The cost of the card starts $9.95.