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Occupy Wall Street members pitch a card for the 99 percent
Members of the Occupy Wall Street movement -- the group that camped out for months in New York City's Zuccotti Park protesting economic inequality -- are getting into the prepaid card business.
Earlier this week, the group launched a Facebook page announcing the new card, which will be offered by the group's brand-new financial services center, the "Occupy Money Cooperative."
The cooperative and its first financial product, the "Occupy card," will be open to anyone who wants in, say the group's impressively credentialed founders (including a former British diplomat, a Cornell law professor and consultant for the Federal Reserve Bank of New York and The International Monetary Fund, a former investment banker and hedge fund manager and a senior data scientist at Johnson Research Labs).
According to the group's website, the Occupy Money cooperative is designed to provide financial services to those who have been excluded from, or have chosen to opt out of, traditional banking services. People who say they're sick of being gouged with extra fees are also welcome to join.
"We are a cooperative company that offers low-cost, transparent, high-quality financial services to the 99 percent," wrote the group's founders on its bare bones website.
Just how low cost those financial services will actually be -- and how successful the group will be in attracting enough users to make the venture financially sustainable -- is still an open question.
The co-op is currently in the early fundraising stage and has yet to formally open for business. So the founders aren't yet ready -- or compelled -- to spell out exactly what they'll do to make their idealistic business model work.
Currently, the website announcing the co-op's launch is long on stirring rhetoric (such as: "Welcome to the start of the financial services revolution" and "It's time to take the financial system back"), but conspicuously short on details.
We know, for example, that the new "Occupy card" will, for now, be the co-op's signature financial product and will cost 99 cents per month just to use it. You won't have to pay an upfront fee to activate the card. You can use it anywhere Visa is accepted, and the funds you load into it will be FDIC insured.
It's not yet clear, however, how much the co-op will charge users to withdraw funds from an ATM (an area in which prepaid card issuers are notorious for hiking fees) or whether it will charge reload or transaction fees (or charge users who get bored with the card a monthly inactivity fee).
In an interview with Forbes.com's Laura Shin, Occupy Money co-founder Carne Ross defended the upcoming fee schedule. "Like any prepaid card, there will be a range of fees. We hope the Occupy Card will be among the best values on the market, and one thing we guarantee are that all of its costs and fees will be completely transparent and clear to the consumer."
As more people sign up and become members of the free-to-join co-op, the card's costs are also likely to go down, said Ross.
Getting enough people to join the movement may be a tough row to hoe, however. Curious about what kinds of challenges the Occupy Money founders may face as they try to bring their idea into fruition, I asked CreditCards.com's resident money expert Ben Woolsey what he thought about the new venture.
"I do think they will potentially face several challenges," wrote Woolsey in an email. "Not so much due to their low monthly fees (though I suspect they may have other undisclosed fees, like per transaction or ATM fees), but primarily due to the fact that the prepaid business, unlike the credit card business, has a very low profit margin and requires significant scale and customer engagement to be financially viable in the long-term."
Very few issuers have been able to overcome those challenges, says Woolsey. The fact that the Occupy Money Cooperative is going to be Web-based, rather than a brick-and-mortar store that can market to and attract walk-in customers, makes it even tougher, he says -- particularly since the Occupy Money folks will need as many customers as they can get to make their low-fee model work.
"The reason most prepaid debit programs have a lot of seemingly high fees isn't due to avarice, but rather simple economic survival," wrote Woolsey.
The Occupy Money folks may get around at least some of those challenges by attracting a loyal and passionate group of Occupy Wall Street alums and sympathizers, says Woolsey. (It also helps that they may enjoy certain tax breaks if they're set up as nonprofit, he says.)
However, the Occupy Wall Street movement is so diverse, it's not necessarily a given that a large enough group of Occupy sympathizers will sign up.
Already, the group's Facebook page has attracted a number of negative comments from Occupy Wall Street members who are livid that the group's name is being used for a financial venture.
A number of other Occupy members have peppered the page with questions about how exactly the venture will work and where the profits will go. So far, the only answer anyone's gotten from the Occupy Money group is: We'll let you know.
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