Mercator Perspectives

New Youth Prepaid Debit Card Taken to the Extreme

A new company in the United Kingdom last week announced it will offer families the opportunity to provide children as young as eight with a prepaid debit card. PKTMNY, the company behind the new card, believes the card will help children become familiar at an early age with electronic payments and the money management skills that come along with them.

The PKTMNY card is similar to other cards dedicated to this demographic. It enables parents to control many card functions, including where their children can shop, whether they can shop online and if they are allowed to withdraw cash. The tight security functions extend further; the card is automatically designed to prevent children from purchasing goods and services meant for adults such as alcohol and tobacco.

So while parents can rest easy over the security features of the card, I question the card’s main objective. Are children at the age of eight savvy enough consumers to fully understand the financial management lessons that the card is trying to espouse? Prior to the launch of the PKTMNY card, similar products like the MeCard and Splash have maintained a minimum age requirement of 13, making the new card incredibly unique.

“As a parent I know just how difficult it is to teach children about money, especially as the school curriculum focuses on using cash and visiting banks, neither of which reflect how children see money being used,” says Mark Timbrell, PKTMNY founder, in a press release. With Internet penetration over 90% for children between 5 and 15 in the UK according to Ofcom, Timbrell believes that the card provides an important financial management tool where mediums like the internet have failed to provide to these lessons. “Despite this (broad internet penetration), children haven't had access to relevant and safe ways of managing, spending or learning about money online,” he said. Although the lack of strong financial education and awareness is a real problem, speaking from personal experience and growing up with two younger brothers, children at the age of eight are not concerned with money management. When my brothers received their allowances, and they wanted to spend it right away rather than enjoy delayed gratification that accompanies savings accounts.

While I commend the parents at PKTMNY for their audacious attempt, the fees alone attributed to the card would discourage savings. The card requires a £5 ($8) membership fee and a further £1 ($1.6) monthly fee and costs from withdrawing from an ATM range from 50p ($.80) in the UK to £2 ($3.2) when withdrawing cost from foreign ATMs. While these fees may not amount to much in the great scheme of things, when compared against traditional children savings account offered by the main financial institutions, the benefits of the PKTMNY card are isolated to largely its security features as the big banks can offer more in the way of interest and services.

All in all, children at eight years old are simply too young for the lessons that this card is trying to teach. Furthermore, the card is isolated to what has become a niche market and success will be minimized. The uphill struggle the PKTMNY card is facing is reinforced by a poll conducted by the Guardian newspaper, which asked, “Would you give a debit card to an eight-year-old?” and the overwhelming result answered no.

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