T-Mobile's Latest Brilliant Wireless Move Is in Banking

T-Mobile has introduced Mobile Money, a T-Mobile-backed Visa prepaid card that is likely to endear itself to anyone who uses check-cashing services.

AT&T has shrugged off the subscribers it has lost to T-Mobile, and presumably others, as mostly "low-revenue" 2G accounts, whose departure has conveniently freed up a bit of spectrum for repurposing. (During the third quarter of 2013, AT&T lost 285,000 such customers.) T-Mobile is not only happy to have cost-sensitive customers, it keeps making clear, but it's actively recruiting them.

T-Mobile, taking a sidestep from wireless Jan. 22, introduced Mobile Money by T-Mobile, a Visa prepaid card likely to appeal most of all to T-Mobile customers without a checking account or who have had a hard time getting a credit card. (According to an FDIC survey, 68 million U.S. adults don't have traditional banking accounts and rely on alternative services.)

The card—which can be tied to and monitored via a free mobile app—can be used to make purchases, shop online, pay bills, send money and get cash from ATMs. Anyone can get the card (in a T-Mobile store or online), but T-Mobile customers are treated to zero fees. There's no charge for activation, for monthly maintenance or for withdrawing cash from an in-network ATM (out-of-network fees are $2), and there are no overdraft fees.

Users can have their paychecks—as well as government assistance checks and tax refunds—direct-deposited to their Mobile Money account. And, as with many traditional checking accounts, users can simply photograph a check, using the mobile app, to deposit it.

"It's ridiculous that families, especially those who can least afford it, have to pay so much for basic check-cashing services that many of us take for granted," T-Mobile CMO Mike Sievert said in a statement. "Mobile Money levels the playing field to put money back in consumers' pockets for important things—like bills, groceries or vacations."

A typical household currently reliant on check-cashing services could save $1,500 a year with Mobile Money, Sievert added, and an average family (based on a third-party study) could save $225 a year in overdraft fees.

While T-Mobile says it's "not content with upending just one industry," it also suggests Mobile Money isn't really such a stretch from its current offers. In early 2013 it was the first Tier 1 carrier to separate device costs from service costs, and it began offering customers the option to purchase devices via no-interest monthly payments.

"T-Mobile has facilitated billions of dollars in loans for customer phones, all without charging a penny interest," it said in its statement.

Mobile Money isn't limited to any one type of customer, clearly, and T-Mobile suggests it could also be a way for parents to budget the spending of teenagers or kids away at college.

"We've already transformed how Americans use and pay for phones, tablets and wireless service; why stop there?" John Legere, T-Mobile's outspoken CEO, asked in a statement.

Wireless' Most Outspoken Rivalry

While T-Mobile made no mention of AT&T in its Jan. 22 statement, Legere hasn't been coy about his disdain for his rival's business practices or his intentions to lure over its customers.

On Jan. 8, at the Consumer Electronics Show, T-Mobile announced that it will pay up to $650 a line for customers of AT&T, Verizon or Sprint who want to switch over to T-Mobile. Many families often feel stuck in their plans, either because of the early termination fees tied to each user or because their contract end-dates are staggered.

"It's not a two-year contract; it's a contract in perpetuity," Sievert said, joining Legere on stage at the CES event.

AT&T pre-empted the T-Mobile announcement, putting out a release days ahead of T-Mobile's scheduled press conference that announced a temporary offer to pay T-Mobile customers up to $450 a line to switch to AT&T.

"My suggestion is that everyone take our plan. And if it doesn't work, then take AT&T's plan," Legere exclaimed at CES, clearly enjoying himself. "AT&T has given us almost a no-fault guarantee! Those [expletives] will pay you to come back!"

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