With a name that is bound to catch the attention of both teens and their parents, San Diego based company BillMyParents is a publicly traded company that could really be in the right place at the right time, thanks to new government regulations that are set to take effect later this year.

Launched in 2009, BillMyParents.com (NYSE: BMPI.OB), was designed as an alternative to PayPal, where kids could shop online, selecting what they want, then at checkout, redirect the bill to their parents via an email alert to PC or mobile phone. From there, parents were expected to login and complete the payment process using a registered MasterCard, Visa, and/or Discover Card.

At the time the company charged $0.50 per transaction. It was a great idea, kids get to shop online and parents can monitor their purchasing habits. For today’s generation it seemed like a perfect direction to teaching teens smarter spending habits. Unfortunately, it seems the idea wasn’t a success, because BillMyParents has shifted their focus to be a fully prepaid debit card service. In a space that is quickly becoming cluttered, thanks to major issuers like American Express and mega retail shops like Walmart joining the movement, BillMyParents would appear to be in a no-win scenario, which would be further compounded if not for a recent change by the government (Durbin Amendment) that determines how banks implement swipe fees.

As we have reported in the past, studies have shown that prepaid cards offer fewer fees than checking accounts, and this was before the new swipe fee rules were approved. With expectations that these new rules will lead banks to introduce new fees, more requirements and less rewards, if traditional debit cards indeed become unprofitable, prepaid cards will step into that space.

Lately, our opinions on prepaid cards targeting teens generally haven’t been positive, so while reviewing BillMyParents, it was a little bit disappointing to see MTV’s Rob Dyrdek’s Fantasy Factory as a spokesperson. Looking past this, we figured it was worth checking out their offer to see if it is any different and if teens and parents should consider it.

Overall, the product is very similar to what you would expect with any other prepaid debit card. Sadly, the unique feature that represented BillMyParents in the past is now gone. Still focused on helping children, teens and young adults between the ages of 8 and 21 to manage spending, parents and kids have the option of setting different levels of freedom.  BillMyParents offers real-time alerts, which will help track spending as well as catch purchases that could seem suspicious. In situations where the purchase is unauthorized or the parent feels their child is on spending spree, they can instantly lock the teen’s card.

BillMyParents seems to understand the space and recognizes the opportunity. Since December of last year, when their prepaid card was just an added feature, the company has taken the time to restructure their fee schedule. No longer do they change start-up fees, once $9.95, and they cut load fees from bank accounts in half to $0.75. Their approach to overdraft has stayed the same (don’t offer it) and the monthly fee of $3.95 has also remained unchanged. One area they do seem to beat out the competition is in ATM-Fees, only charging $1.50 compared to the average $2 we normally see.

In the end, as with BillMyParents, most prepaid offers are pretty much the same.  Families considering this route need to compare features to fees and choose wisely. Thankfully, if we are to see a post-Durbin market dominated by this type of product, at least competition will drive fees down.

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  • ppeyret

    Disclosure: my company runs the UPside Visa prepaid cards which have several versions for teenagers under parental control at http://www.UPsideVisa.com
    BillMyParents is a welcome addition to the sparsely populated market of cards for teenagers with proper parental supervision. Discover pulled the plug on its teen product called “Current” last year. This leaves American Express Pass, Visa Buxx, another MasterCard product called Facecard, and us with the UPside card.

    Many teen payment cards miss a crucial point: teens want to be handed over financial responsiblity gradually from their parents. They don’t want the card in their wallet to stigmatize them with a name or logo that shows that the card is on training wheels.
    A payment card, if done right, is an emancipation tool for teenagers. Buxx missed that point with a cartoon-ish logo and name. PayJunior was even worse. I think BillMyParents is not the best choice of name either.

    Our own most popular cards for teens are those which look un-fancy: just some plain graphics and the Visa logo. We put our UPside brand logo at the back of the card, where the ATM network logos are usually found, because what counts for teens is that they get a Visa or MasterCard card. And we have added several teen-friendly features like the ability to freeze the card from a cellphone in case of loss, or access the card balance via a Facebook widget.

    As reminded by the article above, shopping around for price and features is important, like with any prepaid card product. Parents should also ask themselves how well their teens with perceive the card, otherwise they risk signing their teens up for something that will be quickly abandoned.

  • Amandy998

    Great article. I looked into prepaid cards, and decided against it. Instead I opened up a MONEY account for my teen with ING Direct. No fees or minimums whatsoever. Also think it’s great that they’re making financial aspects cool for teens with a Facebook page and sweepstakes. http://www.facebook.com/ThatsMoney

    Definitely worth checking out, by far the best option for teen banking!