At CTIA Wireless, I had a chance to sit down with Sprint vice president of product platforms and services Kevin McGinnis and talk about Boost Mobile’s new digital wallet. It quickly became apparent from our convesation that Sprint has some big ambitions for the new financial services app.
McGinnis said that it will soon offer a similar wallet to customers of its other prepaid brand — Virgin Mobile — and it is considering bringing it to the main Sprint brand as well. Sprint also plans to build on Wallet’s initial batch of services, to create what McGinnis calls “a virtual bank” for its customers.
Today, Boost’s Mobile Wallet can transfer funds between accounts, pay e-bills, wire money to physical locations and, with the help of prepaid Visa card, you can make purchases and withdraw money from ATMs anywhere Visa is accepted. Soon Boost’s wallet will let you scan physical checks, depositing funds directly into your wallet account.
But McGinnis said there are other services in the works. He didn’t provide specific deals, but it’s not hard to imagine features like virtual checking accounts or peer-to-peer payments such as those offered by PayPal, Venmo and now Google and Square.
Sprint doesn’t want to become bank itself — that would put it under the regulatory scrutiny of the U.S. Department of Treasury, which Sprint wants to avoid, McGinnis said. Instead, Sprint is working with Wipit, a mobile payments provider focusing on people without bank accounts and credit cards, to provide the financial services infrastructure.
“From the customer’s point of view, it’s kind of a bank in the sky that is Boost backed,” McGinnis said.
Sprint’s wallet is unique because it focuses on what the financial industry calls the unbanked – households that deal almost entirely in cash. Most other wallet and financial services apps are linked to bank accounts, credit and debit cards. This approach to financial services has had a huge impact in other parts of the world and has made Kenyan mobile operator Safaricom the biggest bank in East Africa.
The U.S. isn’t Kenya, of course, but according to a Federal Deposit Insurance Corporation study (pdf), 8.2 percent of U.S. households have no bank account whatsoever, while an additional 20.1 percent of U.S. households have a bank account but also make use of alternative financial services such as check cashing and payday loan companies.
Of the major providers, Sprint is in an ideal position to serve those customers. People who rely primarily on cash naturally gravitate towards prepaid mobile phones, and Sprint is one of the most aggressive carriers when it comes to prepaid. It runs three prepaid brands (Boost, Virgin and Assurance Wireless) and offers pay-as-you-go options on its primary Sprint brand as well. At the end of the first quarter it had 16 million customers on prepaid plans.
While Mobile Wallet’s initial focus will be on those unbanked customers, McGinnis said there is a lot of potential for the app for customers who have traditional bank accounts, especially as Sprint and Wipit add new features to the app. That’s one of the reasons McGinnis thinks Mobile Wallet will be a good fit for Sprint’s contract customers.
Sprint already is working with Google on mobile payments, but McGinnis pointed out that Google Wallet is really a point-of-sale transaction technology linking to credit cards or bank accounts. Meanwhile, Sprint’s Wallet is intended to be a replacement for or a supplement to those accounts and payments cards — just without the actual bank.
“There’s nothing broken with plastic in retail today,” McGinnis said. Sprint, he added, just wants to make that plastic available to more people.