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A new contactless debit card for children from a Waltham fintech offers families and their children a chance to learn how to manage money in a safe environment.
When Waltham-based financial technology firm Jassby introduced a contactless debit card for children last month, the company’s family money platform gained both a new feature and a new avenue for promoting financial literacy.
“One of the things that was most important to me and all of us at Jassby – it’s part of our whole philosophy – is that when you let your kids access money … what happens is that you really teach your kids about money, and you start teaching them financial literacy,” said Benny Nachman, Jassby’s founder and CEO.
Massachusetts received failing grades for high school financial literacy on report cards issued between 2013 and 2017 by Champlain College’s Center for Financial Literacy in Vermont. For fintech firms, as well as community banks and credit unions, providing products and services to young children and teenagers opens up opportunities to address financial literacy and create long-term benefits for consumers and communities.
Hands-On Learning
Jassby launched its banking app for children and their families in partnership with Needham Bank last year. The app allows kids to deposit money in a savings account, with parents and grandparents linked to the account to contribute a child’s allowance money, birthdays and other occasions. Soon, Nachman said, teenagers with jobs will be able to have paychecks directly deposited into the account.
Kids can use the money to buy items from Jassby’s shop, including video games, and contribute to charities. Jassby had received feedback that families wanted teenagers to have more options for spending money in their accounts.
The fintech decided to add a contactless debit card to its platform. Since the new feature was announced a month ago, Nachman said, 30,000 families have joined a waiting list for the card.
The card will be virtual. Nachman said he expects plastic debit cards to be phased out in the several years, and families will not have to worry about the child losing the card. Instead, the card will be on the child’s smart phone and can be used wherever contactless payments are accepted.
Nachman said Jassby’s platform takes a hands-on approach to teaching financial literacy.
“Normally when somebody tries to teach financial literacy, it’s like some boring academic lecture, there’s a quiz after, and nobody cares, nobody listens and nobody learns,” Nachman said. “What happens with Jassby is that you give them a little nudge, and they learn through action, they learn through doing.”
Before founding Jassby, Nachman did global research on financial literacy, finding problems worldwide, particularly in the Western Hemisphere. He said in the United States, parents often don’t talk about money because they might not know enough about it, or they don’t consider themselves role models for good financial behaviors.
“In many households, it’s a touchy subject, and people feel uncomfortable around it,” Nachman said. “Part of what we’re trying to do – if you download and install Jassby together with your kids, that’s a great opportunity to start an easygoing consultation about something very basic.”
MA Schools Fall Short
Students receive most of their information about money from parents, guardians and other adult relatives, the Organization for Economic Cooperation and Development, a global policy center, found in its biannual study on student literacy released this summer.
But schools have not been a good resource over the past decade, Nachman said, because of the disparities between districts created by income inequality and the difficulty of addressing the issues in classrooms.
A Massachusetts law that went into effect in 2019 requires the Department of Secondary and Elementary Education to provide districts with guidance on financial literacy curriculums, including topics such as interest, loans and the role of banking and financial services, to help encourage more schools to offer financial literacy instruction.
Other companies, in addition to Jassby, are looking to fill that need. A Cambridge-based fintech, Money Experience, has created a platform that promotes student financial literacy through partnerships with banks, nonprofit organizations and schools.
Jeet Singh, Money Experience’s CEO and founder, said financial institutions using their platform can receive Community Reinvestment Act credit for running financial literacy programs and promote their presence in the community all while helping young people learn financial literacy in an engaging manner that’s easy to understand.
Source of Customers – and Community Service
Both financial literacy and child bank accounts have a long presence at community banks and credit unions. Lowell-based Jeanne D’Arc Credit Union has a savings account, the M3 Money Club Savings, for children ages 12 and under.
While the pandemic has temporarily curtailed the program, students at 25 elementary schools in its footprint learn about banking through a Save at School program, where they can bring money to school and deposit it into an M3 Money Club Savings account. Students from other schools can also have M3 accounts, which come with prizes and rewards.
High schools in Lowell, Dracut and Nashua, New Hampshire, have Jeanne D’Arc Credit Union branches, and students can take a half-year course to learn about banking and financial literacy.
The young people see the benefits of a credit union through the program, said Robin Lorenzen, Jeanne D’Arc Credit Union’s vice president of marketing and financial education, while the credit union benefits because the kids continue banking at the institution where they had their first account and become lifelong members.
But Lorenzen said that the credit union’s main motivation for maintaining the branches is community service.
Diane McLauglin
“We believe that the foundation for a healthy person starts with a healthy financial understanding, and we want to help bring that to people,” Lorenzen said. “Our mission is to help people make smart financial choices, and we believe that comes from education.”
Michael Welch, CEO of UniBank in Whitinsville, said that providing student accounts and financial literacy helps the community bank participate in a family’s well-being by promoting discussions about money. Having a strong digital platform for tech–savvy students, Welch said, is important for engaging them in financial conversations.
He added that the bank doesn’t look at profit margins or return on investment when considering student accounts, but rather the long-term effects on individuals, families and the community.
“Part of our mission as corporate citizens to help train the next generation in finances,” Welch said. “When people have that background, they’re better positioned for stability in their own lives.”
