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Apple Pay: What is the impact on teaching financial responsibility?

Apple Pay launched its mobile payment service in the UK this month. With mobile payments increasingly becoming the norm, how do we teach children to be financially responsible in a world where it’s easier than ever to simply spend money?

The launch of Apple Pay is big news: you can now pay for items with a quick touch of your iPhone. No need to carry cash or cards. Welcome to the new world of “frictionless” payment.

The service requires registration of a credit or debit card. It also requires an iPhone 6 or an Apple Watch, though consumers can use it across more Apple devices if they buy online with some retailers (transactions are secured with a fingerprint). Apple Pay is not the only mobile payment service out there (Google Wallet has been around since 2013), but it is generating a lot of buzz right now. It’s incredibly convenient, and reassuringly secure (retailers cannot see card details, and numbers are not stored on servers). All good news for parents who want to give their children access to emergency money, but don’t want to hand over cash or debit cards. However, Apple Pay is not designed to enable young people to learn financial management skills.

Our mission is to help education embrace technology and transform learning – all kinds of learning. So, how can we use technology to teach children to be financially responsible in this instant payment, cashless, world?

Digital Literacy Includes Financial Literacy

At Techknowledge for Schools, we want schools to use mobile technology to prepare students for living and working in a digital world. This digital world includes using mobile devices not only for education, but to socialise, to play games, and increasingly, to manage personal finances. The technology is changing, and will continue to change. Digital skills will become even more important as other areas of our lives (such as personal finance) become digitised and easily accessible.

These skills include the ability to critically evaluate online information, being aware of and having the ability to deal with safety and security issues, and understanding how privacy works in the online environment. Managing finances online calls for young people to use and strengthen all these skills. We know that teaching and learning with personal mobile devices is transforming how students learn: they are more engaged.

Our research has also found that mobile devices in the classroom make students more self-directed in their learning. They feel more responsible for the results and are willing to learn even outside the classroom. This is the sort of autonomous decision-making that is essential to good financial choices. Personal finance is now part of the UK curriculum. However, since mobile devices blur the distinction between school and home, both parents and teachers can educate students on responsible spending. Many apps (such as Roosterbank, an online piggy bank) can help students learn about money matters.

Parents can take an even more involved approach since they can open bank accounts for their children. Most “bricks and mortar” banks will provide accounts and debit cards to children over the age of 11. However, these accounts don’t allow for learning how to manage money in an “instant payment” world. Luckily, a number of digital bank accounts are now dealing with this issue. These accounts are for young people aged 8-18 and are managed through apps on the child’s device. Children get the responsibility of owning a pre-paid debit card (which can be linked with services such as Apple Pay) and parents have a variety of options in terms of monitoring spending.

Go Henry: A bank account “reimagined” for young people

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Go Henry is a bank account specifically designed to teach young people about managing money responsibly. Children get their own pre-paid debit card (no overdraft). The account is managed either through the website, or a free app from iTunes or Google Play. What makes Go Henry more than just a regular bank account, or a service like Apple Pay, is that parents can positively impact their child’s behaviour toward money.

Parents get an account linked to their child’s account. The ability to set tasks for children to earn money means that they learn to relate their earning and saving to spending. Parents can also decide where the card can be used (ie, only in a certain bookshop). Parents can set daily or weekly spending limits in order to help children consider whether a purchase is really necessary that day. Most importantly, these limits can be adapted according to the needs of the child, and to reward them for handling money responsibly.

Learning money skills in an instant payment world also means keeping on top of transactions. Go Henry provides real-time balances and statements of outgoings, in addition to a weekly email of activity.

Osper: Taking a “mobile-first” approach to banking

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Osper’s banking service is completely designed for the mobile experience: it’s just an app (on iTunes or Google Play) through which parents and children can manage the prepaid debit card. There is no overdraft. Either the parent or child can lock the account if the card is lost. The account has a number of features to encourage responsible money management. Parents are given a separate login and can easily monitor outgoings and make instant deposits. There are text alerts if transactions are declined, in addition to statements of activity.

Parents can also schedule allowance payments and set limits, as in Go Henry. One particularly useful feature is the ability to block children from buying from inappropriate merchants.

Have your children or students used digital bank accounts? Please share your experiences in the comments below!

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