Can an organization offer mainstream financial products while being ideologically opposed to the mainstream financial industry?
That’s the question I began considering when I first heard that the Occupy Wall Street movement was in the process of developing a prepaid debit card product. The Occupy Debit Card is still just a concept, but if the Occupy Money Cooperative is able to raise enough money, it will become a reality. I don’t expect this will happen soon; the Occupy movement has raised just over $6,000 of its $900,000 goal.
Is the Occupy Card a legitimate replacement for mainstream banking? For several years, prepaid debit cards fell into an “outsider art” kind of category. These products were offered by smaller companies that didn’t quite fit in with traditional banking. Prepaid debit cards offered a way to replace cash in transactions without the necessity of having a checking or savings account with a traditional bank or credit union.
As the products have grown in popularity and have been shown to be profitable for the small companies, larger banks have begun offering similar products in an effort to corral fringe customers into the mainstream financial industry.
If you couldn’t qualify for a checking account at a bank — perhaps you’ve had a history of unsuccessful money management or just a distrust of the financial industry — you could get a prepaid debit card. If the neighborhood in which you live has no convenient bank branches but does have check-cashing storefronts and payday loan services, a prepaid debit card might seem like the best option.
The question is not whether the Occupy Card is a worthy competitor to mainstream banking, but whether prepaid debit cards are good ideas in general. Many banks require minimum initial deposits or minimum ongoing balances either to avoid fees or to open the account initially, and these financial requirements can be a burden on the underemployed, the unemployed, or households that are otherwise struggling. If you don’t see a path to being able to save money each month, maintaining a bank account would be very difficult.
With a prepaid debit card, you eliminate the need to save money on a regular basis. But this need to save can be a powerful motivator to spend less than you earn and improve the financial condition of your household. Relying on prepaid debit cards enables the status quo. And it does that for a fee.
Is the Occupy Card better than other prepaid debit cards? The fees for the Occupy Debit Card are comparatively low. The best option is to qualify for free banking. If you’re a student, chances are you can still find free checking. Failing that, you can choose from among a number of prepaid debit cards.
There is no fee to receive the Occupy Card. The card carries a $0.99 monthly fee but that fee can be waived if the user meets certain conditions. This fee is lower than every other card I’ve seen. The process of reloading money onto the card is free except for the $4.95 MoneyPak fee. This is similar to how the American Express Prepaid Card works, and the fee is not collected by Occupy. At Wal-Mart, the reloading fee is $3.74, charged by the store.
For other check deposits, if you want the cash to be available immediately on the card, there is a 1% or 4% fee, but if you’re willing to wait seven days for the check to clear, the deposit is free. Transfers from another debit card or credit card carry a fee of $2.80. ATM withdrawals cost $1.95 each, and Occupy suggests cardholders get cash back from purchases rather than using ATMs for withdrawals. Getting cash back during purchases is limited, however, to $60 per day and 15 transactions per month.
If you want to have Occupy send a paper check from your debit card account, each check initiated online costs $2 or more to process. You’ll pay a fee if you want to call the card’s customer service, even if you don’t talk to a representative. Checking your balance at an ATM costs $0.99. The fees don’t end there. See the full list here.
Does the Occupy Card respect the movement’s anti-bank philosophy? Money you deposit onto the Occupy Card is allegedly FDIC insured. That means that when you have an Occupy Card, you are supporting the mainstream financial industry. Your money is held at a bank. The Occupy Card website does not disclose which bank this is or offer an FDIC enrollment number. Since the Occupy movement is not a bank itself, it must be working with a bank in order to receive FDIC coverage.
Furthermore, separate from the FDIC issue, in order for the card to be accepted at retailers and ATMs, the Occupy Money Cooperative has formed a partnership with VISA. The initial board of directors of the organization has experience in the mainstream financial industry. These relationships have drawn criticism from supporters of Occupy Wall Street towards the Occupy Money Cooperative.
Is the Occupy Card simply an attempt to cash in on the anti-establishment Occupy Wall Street brand, is this product and the fact that all cardholders are members of the co-op, like a credit union, truly revolutionary, or is the debit card just a better alternative than working directly with a bank?
The Occupy Debit Card seems to be just another option among the group of debit cards that aren’t really all that great.
- The fees are comparatively low, but there are many of them.
- One of the messages of Occupy Wall Street is to refuse to support the financial industry that contributed to the recession, but a majority of the 99% can and will do business with mainstream banks.
- Many who do will pay less for their financial management than those who work exclusively with prepaid debit cards.
- The Occupy Card itself doesn’t free cardholders or members from the same banks that are vilified.
The debit card’s website announces, “The Occupy Money Cooperative is the start of a revolution in banking.” I don’t think there’s any revolution here. Despite the cooperative structure of the organization, this is a mainstream financial product that relies on the financial industry and the federal government.