Fintech for Teens Sees Transactions Worth Crores a Month on New-Age Banking Apps

Satya Siba Nayak, 15, uses a debit card to pay for YouTube Premium and Netflix, to download apps from Google Play, and to pay for things when out with friends. By signing up for an app called FamPay, a hero can have his card to make payments offline and online.

“My father does not live with us because he works in Karnataka and my mother was not used to it. google pay And stuff, so I was researching about a solution to do cashless transactions,” the class 10 student told Gadgets 360.

He said that earlier asking for one-time password (OTP) was quite irritating for his parents, but with his dedicated account on FamPay, he doesn’t have to bother them anymore.

Young Indians like Nayak say that a cash allowance from their parents is neither convenient nor always possible. For many parents, prepaid wallets were a good option to give their kids more freedom while also allowing them to set boundaries. Now, a new wave of fintech platforms are rolling out full debit programs for teenagers, and are seeing hundreds of millions of transactions every month. But with the increase in the number and value of transactions taking place through these platforms, the growth of apps being an ultimate financial source for children is also raising concerns.

ultimate customer

Before moving to FamPay, Nayak used to transact using the cash he received from his parents as pocket money. He also often used his parents’ debit card to place orders online. But with easy access to your card, Nayak’s expenses (online and offline) increase to Rs. 2,500 per month.

FamPay is one of the popular new age banking apps (commonly known as Neobank) in India for kids and teens. Other popular apps in this category include Junio, which was launched in May this year by the former Paytm Officer, and Walrus, which was launched in 2019.

Junio ​​allows parents to load money into their kids’ prepaid cards using its mobile app
photo credit: junio

Sourajyoti Burman is one of the active users of Fampay. Burman (17) signed up on the app in January with the sole purpose of having his own card to make transactions instead of relying on the solutions chosen by his parents.

Like Nayak, Burman also got around Rs. 2,500 on monthly basis through FamPay. However, he noticed that his total expenditure became less than Rs. Before getting the FamPay card he had Rs 3,000 per month as he had limited funds in this account, while unlimited access was available to him from his father’s Google Pay account.

New Age Platforms Vs Traditional Banks

The company said that FamPay reached 13,50,142 registered users and 38,44,609 transactions in the first quarter of 2021. Junio, on the other hand, said that it has paid Rs. Handled over 6,50,000 transactions. 30 crores since launch through a user base of over 2,50,000 users. Junio ​​also said that it processed transactions worth Rs 2,00,000. 10 crores in October only.

Since traditional banks don’t allow teens to have their own standalone bank accounts without a parent or guardian, platforms including FamPay and Junio ​​attempt to fill that gap. As such, you do not need your parents’ consent to create an account, nor do they need to have their account with these apps, nor are documents such as birth certificates asked for.

All you have to do is download the app to a device, verify your phone number, and register by entering personal information, such as their full name and full address. Once the registration form is filled on the dedicated app, the platforms have a Know Your Customer (KYC) requirement which parents have to complete by uploading a government-issued ID card.

Apps also charge a fee for signing up. FamPay charges a one-time fee of Rs. 299 for its regular card, or Rs. 599 for the premium card. The main difference is rewards and tie-ups like Zomato Pro, and personalization of cards.

fampay famcard model comparison image FamPay

FamPay offers two different prepaid card options to kids
photo credit: fampay

On the other hand, Junio ​​has a Rs. 99 signup fee. The company says that in lieu of the signup fee, users get a scratch card, which offers cashback of up to Rs 1,000.

These apps also give parents the ability to monitor their children’s expenses through dedicated analytics and dashboards. Also, parents can stop any transaction on their behalf or receive notifications for every new payment made by their children through the app.

Although apps including FamPay and Junio ​​are designed as a platform for teens, they don’t want to be the only solution until their customers are adults. The aim of these new players is to emerge as a one-stop banking solution for these adolescents after completing their teenage years.

“If we open a bank account, if we’re happy with it, we don’t go and change,” said Junio ​​co-founder Shankar Nath. “So, we want to be like that and capture kids ages 12-13 and build a relationship with them through our app, which is what we’re looking at.”

Key Differences Between Traditional Banks and Fintech Apps for Kids

Properties traditional bank new age fintech apps
parental consent required Yes No
access to expense analysis No Yes
Immediate Payment Service (IMPS) support Yes (but for a limited amount) No
Parent’s bank account mandatory yes (in most cases) No
Documents required including birth certificate yes (in most cases) No
Transaction amount is limited Yes No
Recognized by RBI Yes No
UPI Support No Yes

Concern over targeting of minors

David Monahan, Boston-based campaign manager for Fairplay, Massachusetts-based kids-focused watchdog group, said prepaid cards targeting children raised significant concerns about sensitive data companies were collecting about children’s spending habits and to whom they were sharing it.

When asked about data sharing, which is also suggested in Privacy Policy Listed on the company’s site, Junio ​​said it did not share user data with any third party.

FamPay, on the other hand, said that it takes the consent of the user to share the data.

“As part of our co-branding arrangement with our banking partners and other associated services, we are required to share KYC and other data so that banks and ancillary service providers can authenticate users to initiate transactions on our platform Once a user becomes part of our ecosystem, we have procedures in place to obtain consent for such data sharing,” the company said.

Monahan also said that under the guise of promoting financial literacy, these platforms were actually designed to inculcate the habit of shopping even young children, regardless of whether they can afford to buy things or not. No.

“They are also building brand loyalty for some banks and brands when kids are young and impressionable,” he said.

Kazim Rizvi, founding director of public-policy think-tank The Dialogue, agrees with the concerns raised by Monahan and pointed out that these teen platforms were also collecting biometric data of minors that required a high level of security.

“This app is for children below 18 years of age and their parents. This calls into question valid consent to the use of services and the financial system at large. It goes without saying that such an effort inevitably collects data,” he said.

Some market experts also believe that regulatory controls are needed as minors are considered as the target audience by these platforms, but the Reserve Bank of India does not have any specific criteria for these young customers.

However, Raghav Aggarwal, a Principal Advisor who analyzes fintech strategy and engagement in PwC, told Gadgets 360 in his personal capacity that there is a need to regulate these platforms and recognize them as an individual bank. This would require a lot of capital.

“As soon as you identify an institution as an individual bank, there are very high compliances, very high capital requirements that come into the picture, which will block a lot of capital or require expensive capital from these neobanks. Instead of getting involved in innovation, technology, customer acquisition, they have to park that money as compliance,” he said.

Aims to be a teen bank for a lifetime

For fintech apps, the goal is not just to play a part in children’s lives, but to be a part of their continuing lives.

“That’s why we call ourselves FamPay, not just a teen payments app,” said Kush Taneja, co-founder of FamPay. “We want to be with them, we want to include them in the entire financial ecosystem, and we want to grow with them.”

Junio ​​co-founder Ankit Gera told Gadgets 360 that one of the ongoing developments was to give credit is i through app.

“Because the kirana store in your neighborhood may not have a swipe machine. So, we are creating a feature where you can scan and pay. We are going to give credit on that payment mode as they are like small payment of Rs 100,” he said.

Junio ​​eventually plans to offer college, education and personal loans that will be given to users on attaining the age of 18. In the short term, the company is in talks with fast-moving consumer goods (FMCG) brands. runs various offers on its platform.

What is attracting children?

Junio ​​K Nath told Gadgets 360 that he and his partner Gera took the greenlight (a.) Popular Apps in America) as a reference model for their app.

“Kids these days are the CTOs of the house, almost because they are far more digitally savvy than their parents in many respects,” said Nath, who served as chief marketing officer and senior vice president at Paytm. “So our whole approach was essentially driven by the fact that if a child is transacting digitally, they should have their own payment instrument, of course under supervision.”

While Google Pay and phonepe To compete with huge cashback and rewards for getting people to sign up, the team at FamPay said kids aren’t looking for the same kind of offers.

FamPay’s Taneja said, “Kids don’t come to our platform for awards.” “When they choose something, they don’t choose because of the reward, they choose because they feel that the emotional connection, the brand value, the value prop and that beauty are more than just rewards.”

FamPay also provides teen consumers with the ability to communicate with customer agents on its platform using GIFs, memes, even voice notes. To give a personalized experience to young customers, FamPay has doodles on FamCard Me.

Fampay Famcard Me Doodle Images Fampay Famcard Me Famcard

FamCard Me lets kids doodle on their prepaid cards for a personalized experience
photo credit: fampay

Taneja explained, “What happens is that once teenagers get a card, they want to flash it.” “They want to show it to their friends, they want to put it on Instagram, and they want to get that feeling.”

Fampay plans to bring fantasy characters to its cards to promote personalization. Taneja hints that fantasy characters could be from Disney And may come at the cost of FamCoins. However, the customers we spoke to are more interested in paying without OTPs than in customizing their cards.

“You can be really creative with FamCard Me and have seen great designs, but Rs.600, I don’t think I will take it,” said Nayak. “I might reconsider if they give some discount.”