Pocket money: the end of piggy banks in the era of mobile applications?

(AFP) – Goodbye coins to buy a snack? Valued at several billion dollars with millions of users in the United States, banking applications for teenagers are attracting more and more parents and children in France.

Pixpay, Kard, Vybe, Xaalys… start-ups are scrambling to offer payment cards and tailor-made mobile applications to seven million French teenagers.

“Traditional banks do not consider them as customers but as the children of their customers: their applications are transposed but not necessarily adapted”, explains Scott Gordon, co-founder and director of Kard.

These “fintech” – a contraction of finance and technology – start from the same observation: young people are mostly equipped with a smartphone, buy more and more on the internet, especially after confinement, and parents have less and less cash. .

But they currently only have a few hundred thousand users in France, although downloads are increasing rapidly.

Their creators, in their thirties or forties, cite their American models: Greenlight and its nine-figure fundraising which values ​​it around three billion dollars. And its little sister Step, which counts singer Justin Timberlake and influencer Charli D’Amelio among its “business angels” and exceeded one million users six months after its creation.

The problem of France, according to them? The weakness of financial education when it is the primary motivation of parents when they start giving pocket money (around the age of 11, according to a Poll&Roll survey carried out for Pixpay at the end of 2020).

“They need tools. It’s easier for the teenager to build a budget on the application, to follow its evolution. He can easily set aside, create pots for small projects, offer his parents ‘to carry out paid missions, to be paid for his first odd jobs with an RIB, to receive the money for the objects he has sold online”, abounds Caroline Ménager, co-founder and marketing manager of Pixpay.

Parents have access to accounts, “a plus for blended families”, according to Caroline Ménager, and can limit spending.

– “Financing adolescent sociability” –

Hélène Ducourant, teacher-researcher in sociology at Gustave Eiffel University, nevertheless tempers parents’ need for control and the discourse on the educational virtues of pocket money: “teenagers decide and the money is mainly used to finance their sociability, friendship, fast food, shopping with friends”.

From the first purchases that find an echo in the cash-back programs offered by the applications – which credit a percentage of the expenditure back to the teenager’s account thanks to partnerships with major brands such as Burger King, Starbucks, PlayStation Store or Asos.

These partnerships allow Vybe to finance its card and its application, free but with fees on certain withdrawals, when the three other players have chosen the subscription, between three and five euros per month.

An economic model that increases the likelihood of being bought out by traditional banks as part of their innovation strategies, according to Hélène Ducourant.

“We are talking about minimal amounts (teenagers receive an average of around thirty euros per month, editor’s note) and in France we are still in + cash education +, with a bank account which is used to save and cash which we spend immediately , it’s old-fashioned, but still in the majority even if these new players will help to change that”, underlines the researcher.

Rather than aiming for redemption, Pixpay relies on partnerships with traditional banks to direct those over 18 to the one that best suits their needs instead of automatically choosing that of their parent.

Scott Gordon of Kard is more ambitious: “we want to pass the critical threshold of majority and support them in student life and then in working life, with perhaps loans, insurance… We are even thinking about cryptocurrencies”. Even if it means becoming a full-fledged neobank.

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