T-Mobile’s biggest goal over the last year has been to disturb the roost that rival U.S. carriers have been sitting comfortably in for years. By eliminating carrier subsidies, creating new payment plans for smartphones and allowing customers to upgrade their smartphones more frequently, its competitors—AT&T, Verizon and Sprint—have all raced to match or exceed T-Mobile's offerings.
But T-Mobile’s competitors may not want to follow "Big Magenta" in its latest attempt to shake up the cellular industry.
T-Mobile announced Wednesday that it is getting into … personal finance. Called “Mobile Money,” T-Mobile’s new program is designed to disrupt the finance industry’s model of forcing people to pay to manage their own money via check cards, bank accounts and other fees.
Mobile Money is targeted at millions of Americans that have few banking options, or don't have a bank account at all. T-Mobile will offer consumers a reloadable T-Mobile Prepaid Visa card along with a mobile money management app, and while the program is available for all consumers, Mobile Money will be completely free to T-Mobile subscribers.
The T-Mobile Visa cards will be able to be reloaded at carrier stores and later grocery chains like Safeway. T-Mobile will make it free to withdraw money from 42,000 ATMs across the country and the card can be used anywhere that Visa is accepted.
“We’ve already transformed how Americans use and pay for phones, tablets and wireless service; why stop there?” John Legere, president and CEO of T-Mobile, said in a press release. “Millions of Americans pay outrageous fees to check cashers, payday lenders and other predatory businesses—just for the right to use their own money. Mobile Money shifts the balance of power for T-Mobile customers and keeps more money in their pockets.”
Will Other Carriers Follow T-Mobile Into Personal Finance?
Mobile Money is kind of a strange play by T-Mobile. On the surface, the program has really nothing to do with its primary cellular business. T-Mobile vice president Andrew Sherrard told Recode.net that the program is not designed to make money by itself, but to create more loyal T-Mobile subscribers.
Mobile Money is also not a stab by T-Mobile to control the burgeoning market for mobile payments at retail stores. T-Mobile is part of the ISIS Consortium (with AT&T and Verizon) that uses Near Field Communications through a digital wallet to enable payments at retail stores. This is a pure personal finance move by T-Mobile.
It is difficult to judge the motivations of T-Mobile in creating Mobile Money. With all the noise it made in changing the structure of smartphone contracts in 2013, it led the other three big carriers down a new road in how they charge consumers for their services. Does T-Mobile hope that Sprint, Verizon and AT&T will follow it down the personal finance road as well, creating large and difficult-to-manage business verticals that could ultimately cost the carriers more money than they're worth?
Matching T-Mobile’s tweaks to customer contracts was fairly easy for the other carriers. Personal finance is another thing entirely.
It is doubtful that personal finance issuers will follow T-Mobile’s move to eliminate management fees either. The banks, transaction processors, credit unions et al. are so entrenched in their ways and have such deep pockets that they can basically afford to ignore the pesky T-Mobile and proceed with business as usual.
What Mobile Money may ultimately come down to is good public relations for T-Mobile. It can say, “hey, look at us! We look out for the little guy. The other carriers don’t do that!” But only time will tell if this strategy actually pays off.