Uncarrier T-Mobile wants to be your un-bank too

What's the next stop for T-Mobile's Uncarrier train? It's the world of mobile banking.

T-Mobile's latest program is Mobile Money, a low-cost way for consumers who don't have a bank account to store, access their money, and pay bills through their phone and a Visa-backed T-Mobile debit card.

T-Mobile is the latest in a wave of companies following the money and attempting to create a digital wallet for its customers, a group that includes larger players such as Google and Visa. T-Mobile is part of Isis, a joint venture with AT&T and Verizon Wireless that is attempting to create its own digital wallet.

But unlike those ventures, T-Mobile's Mobile Money is addressing a segment of consumers generating less income and uncomfortable with or unable to use traditional banking services. This isn't about turning their smartphones into wallets; it's about giving them bank accounts in the first place.

A more apt comparison is to Boost Mobile's Mobile Wallet program, which it unveiled in May with little fanfare and attention.

In both cases, the same kind of prepaid, no-credit-check customer is the ideal target for their digital wallet initiatives. It's a potentially large market, with nearly 70 million so-called unbanked consumers in the US. For T-Mobile, it represents an expansion of its core business.

"Mobile Money is the first sign we've had that T-Mobile is interested in going beyond the traditional wireless services business," said Jan Dawson, an analyst at Jackdaw Research.

Consumers can sign up to get their Visa debit card at a T-Mobile store, which can be accessed online or through an iPhone or Android app. They will need to register the card to activate it. From there, they can refill the account at a T-Mobile store or at Safeway markets (other locations will become available) and access a network of 42,000 ATMs with no fees.

There are a number of these services already available to consumers who don't qualify for a traditional bank account, but they each come with a series of onerous fees, including charges to sign up for a card, to top up the account with additional funds, and to withdraw cash. There are charges included with check-cashing services. Consumers are forced to deal with these fees because they can't qualify for a traditional bank account.

Under Mobile Money, a T-Mobile customer would be exempt from many of these fees. For instance, refilling the account with more money is free at a T-Mobile store, although offsite locations may charge around $3 to $4. A non-T-Mobile customer can sign up for Mobile Money, but would have to pay more traditional fees.

"One of the main reasons we're doing this is to deepen our relationship with our customers," said T-Mobile marketing executive Andrew Sherrard.

With a Mobile Money account, customers would also be able to access services such as eBay and Amazon, something they weren't previously able to do. They are able to set up direct deposit into the account, or allow customers to deposit a check by snapping a photo of it on their smartphone.

Customers can also add cards to the account and transfer money between them, for instance providing a son or daughter heading off to college with a debit card.

T-Mobile is working with The Bancorp as its bank partner, Blackhawk, which is managing the program, and Allpoint Network for its access to ATM machines.

Sherrard noted that T-Mobile held a pilot in Miami and saw better-than-expected success. While he had assumed prepaid customers would primarily be interested in Mobile Money, he was surprised to see 40 percent of the users were more credit-worthy post-paid customers.

"We actually see a real need," he said.