Banks reap rewards from students’ pre-paid cards

Kenyan banks are betting on pre-paid cards for students to help deal with the historic cases of insecurities around pocket money given to students termly while at the same time shoring up their customer bases.

The lenders expect that in addition to listing of millions of secondary and tertiary learners through provision of pre-paid cards helping to prevent incidents of break-ins in dormitories it will also help deepen financial inclusion and increase financial literacy among the youth.

Of the banks that have issued thousands of cards targeting boarding schools, KCB Group and Co-operative Bank, say that the move is meant to revolutionise the way learners manage their finances and promote financial literacy across the country.

The pre-paid cards offer a range of benefits including increased accountability, reduced theft risks and the promotion of financial independence in addition to promoting a savings culture among students.
Digital economy

Johnson Ondicho, the KCB Bank’s Head of Digital Channels Strategy, Product and Business Development said the pre-paid card issuance drive is a crucial step towards promoting the growth of Kenya’s digital economy.

“The programme has already made significant strides, with over 391 schools and 386,000 students on-boarded. We remain committed to expanding the initiative, with a target of reaching 3.7 million secondary students across the country,” he said. Co-op Bank has also introduced a pre-paid card which allows a parent to load cash into a card which students carry to school.

The CoopPay student Visa Prepaid card is considered a safer and more convenient way for students to receive and manage their pocket money, as their parents or guardians no longer need to send pocket money to third parties including bursars, matron or class teachers.

Co-operative Bank said parents or guardians are eligible to apply for the card. “It is not mandatory to open an account at Co-op Bank to acquire the student card,” the lender said, emphasising that all what they required was their National ID and KRA PIN numbers and the child’s birth certificate and passport size photo upon which the card will be ready for collection in four working days or delivered to the school free of charge.

The cards enable student to shop either at their school canteens, supermarkets, pay for meals in a restaurant online at no extra charge, with the only amount deducted being the cost of the item being purchased.

Ondicho explained that the application process is coordinated by the school administration, ensuring a seamless distribution of the cards.

Schools, he added, receive Point of Sale (POS) machines to facilitate payments, with the cards preloaded for use at designated payment points determined by the institution. “Parents have various options to load cash onto the cards, including KCB Mtaani agents, KCB Mobile Banking platform, KCB branches, and KCB ATMs. The minimum deposit amount is as low as Sh50, while the maximum is dependent on the parent’s financial capacity,” Ondicho said.

In the case of Co-op Bank, students can withdraw cash at all Co-op Bank agents, Automated Teller Machines (ATMs) and any other Visa Branded ATMs in Kenya and abroad. Parents can load the card through M-Pesa pay bill 400200. For KCB, the card is also loaded through the M-Pesa pay bill 522522.
The card has a safety feature that enables parents to receive notifications through Short Message Services for every transaction made by the student. The notification details the amount, time and merchant details.

With this notification, parents are able to monitor purchases, position and situation of the student and receive free email statements on request or print a mini statement at any of the bank’s ATMs or Agents. They are also protected by Chip and PIN technology and in case it gets lost or stolen, can be blocked at any time and replaced easily.

Family Bank is also one of the lenders unveiling prepaid cards targeting, among others, the youth. The Student Cards target pre-teens and teenagers and allow their parents to help them learn the saving culture through trackable spending.