Mango Financial reaches out to unbanked Gen Y consumers by offering low fees and an attractive branch.
Mango Financial unveiled its first branch in Austin, TX this week, with 10 more branches anticipated nationwide in the coming year. Aimed at 25- to 35-year-olds with incomes less than $60K, Mango offers a prepaid card, check cashing, bill payment, and wire and mobile transfers. Mango Financial’s lower fees and appealing branch aims to remove some of the stigma associated with check cashing services.
Neither a credit union nor a bank, Mango customers can manage their account through the MangoMoney website. Mango Financial offers MasterCard branded prepaid debit through Horizons Bank. Mango members pay a one-time $10 fee and, in return, they can take advantage of lower pricing and free card reloading. Non-members pay a 1% fee to cash checks and load the money to a Mango card. As long as users load $500 to the card each month by check, direct deposit, or bank account transfer, there are no monthly charges. ATM withdrawals cost $2 in addition to fees from the ATM provider.
Other reloadable prepaid cards, such as Green Dot, charge as much as $4-6 to activate the card, $4-6 to reload the card, $2.50 to use a non-network ATM, and a maintenance fee for dipping below a minimum balance. For Green Dot, that fee is $5 per month for keeping a balance less than $1,000.
There is a growing need for short-term credit and to serve the needs of the un(der)banked. financial institutions shouldn’t ignore the growing threat from alternative providers in the prepaid card market. Companies such as Green Dot and Western Union are rapidly gaining market share in a range of services geared toward the unbanked. According to Mercator Advisory Group, in 2008 consumers loaded $60.42 billion onto open-loop prepaid cards. This is a 54.3% increase over 2007. If companies such as Mango Financial can effectively position themselves as an alternative to high-fee providers, then it will be able to tap into a source of new customers and in the process might reach beyond traditional unbanked segments.