Koho Extra Account: Prepaid Going Premium?

Canada’s prepaid recognition card country ne'er fails to beryllium interesting. 

Whereas this conception of the marketplace was successful its infancy a specified 5 years ago, there’s present an endless roster of competitors: from the PC Financial Money Account, to EQ Bank’s no-FX interest offering, to the once-great Mogo Prepaid Visa, and others, we person much options than ever before.

I was truthful funny to larn astir the Koho Extra Account, and ponder astir whether its “premium prepaid” quality volition seizure the imaginativeness of younger consumers.

Let’s dive in.

Koho Extra Account Features

Just by looking astatine Koho’s promotional materials, it’s beauteous wide which demographic they’re targeting.

The Koho Extra Account is disposable to each Koho cardholders who already person the base-level (free) mentation of the product. That aforesaid merchandise already earns 0.5% currency backmost connected each transactions, and is accepted wherever Mastercard is. 

The Koho Extra Account is besides aimed astatine millenial and Gen-Z customers who are acquainted with the omnipresent subscription-based work model, hence the $9 monthly fee alternatively of the one-off yearly interest that older-school products possess. 

This upgraded mentation of the Koho Card provides the pursuing features:

• 2% currency back connected restaurants, cafés, bars, groceries, and pre-authorized payments specified arsenic telephone bills
• 2% interest connected the sum of the full equilibrium loaded onto your card
• No overseas transaction fees
• One escaped planetary ATM withdrawal per month
• $3 disconnected Koho’s Credit Building Coach ($7 per period alternatively of $10 per month)

The sanction of this upgraded relationship has besides been changed from Koho Premium to Koho Extra, and it comes with the now-ubiquitous vertical paper plan truthful communal successful the property of the compartment telephone cardholder case.

Where’s the Value?

Frankly, I don’t recognize the unsocial worth proposition that this merchandise is expected to bring. A level complaint of 2% currency backmost connected 3 categories, positive 0.5% currency backmost connected each different purchase, is already matched by the Tangerine Money-Back Credit Card.

In fact, the Tangerine paper adjacent lets you select the 3 categories you privation to gain 2% currency backmost on, truthful you aren’t shackled to the restaurant, grocery, and pre-authorized outgo categories.

Moreover, currency backmost is deposited straight into your Tangerine relationship alternatively than being provided arsenic a connection credit, truthful you tin usage it for cash- oregon cash-like transactions.

If you conscionable the minimum income threshold requirements, you tin adjacent suffice for the Tangerine World Mastercard, which comes with a complimentary suite of security sum arsenic well.

Of course, the Tangerine products don’t diagnostic nary overseas transaction fees, truthful you’ll get dinged 2.5% connected overseas currency transactions. However, if you indispensable stay successful the prepaid recognition paper space, wherefore not past conscionable usage the EQ Bank Card, which is escaped and comes with nary FX fees.

Why wage $84 to harvester the features of 2 escaped products erstwhile you tin easy conscionable get some of those different products instead?

Premium prepaid cards look to connection fewer benefits implicit accepted debit oregon recognition products

Personally, I deliberation it’s a question of marketing, since each azygous millenial/Gen Z-oriented merchandise is built arsenic a subscription truthful the work supplier tin trust connected changeless revenue. Start-up issuers, specified arsenic Koho, truthful usage a subscription exemplary with which these younger consumers are acquainted successful bid to monetize their product.

However, what’s the unique worth proposition to the consumer? $84 a twelvemonth could bargain a cardholder a overmuch amended recognition card, and successful information astir mid-tier Visa oregon Mastercard products travel with no yearly fee for the archetypal twelvemonth anyway.

Anyone consenting to walk wealth connected a monthly ground could alternatively get the American Express Cobalt Card, which earns 5 points per dollar spent connected groceries and eating astatine a outgo of $12.99 a period – a 150% summation connected earning successful these categories for lone a ~40% summation successful fees.

Then there’s the question of involvement – paying $9 a period to gain 2% involvement seems beauteous lame erstwhile immoderate escaped savings accounts volition often supply you with 5% interest, astatine slightest for a promotional period.

A Theorem connected Prepaid Credit Cards

In my estimation, prepaid cards are astir lone ever bully for the issuer, due to the fact that said issuer tin cod the higher swipe fees associated with recognition networks similar Visa and Mastercard.

On the different hand, prepaid recognition cards can’t beryllium utilized astatine businesses that lone instrumentality debit, which is an inconvenience for the customer. They besides can’t beryllium utilized to wage for services specified arsenic taxes, which besides lone usually judge debit.

Next, due to the fact that prepaid cards are funded successful beforehand with the customer’s existent money, the cardholder truthful besides can’t initiate chargebacks arsenic easy arsenic if they were utilizing recognition cards.

This is due to the fact that recognition paper issuers thin to broadside with customers due to the fact that transactions are initially made with the issuer’s funds, which the cardholder past promises to wage back. With prepaid products, this favoritism is eliminated.

Moreover, prepaid recognition cards don’t springiness you the quality to either clasp onto indebtedness (albeit astatine a hefty involvement charge), oregon adjacent to escaped up your idiosyncratic currency flow. As overmuch arsenic we each hatred paying interest, the 21-day interest-free grace play aft a recognition paper connection closes tin enactment wonders for currency travel management.

Prepaid recognition cards don’t connection the aforesaid currency travel convenience arsenic their accepted cousins

Oh, and if propulsion comes to shove and you find yourself bereft of currency and hard-up connected accessing your Canadian accounts successful a overseas country, you tin conscionable instrumentality your recognition paper into an ATM and instrumentality wealth out. You’ll wage hefty fees and interest, but sometimes $500 successful dinosaur bills tin beryllium the quality betwixt getting location oregon not.

A counter-argument could beryllium made that indebtedness is atrocious and it’s bully to thatch customers financially savvy habits. But past I person to ask: wherefore wage Koho (or immoderate akin issuer) $9+ a period for features that tin beryllium (mostly) attained for escaped by combining different prepaid products specified arsenic the EQ Bank Card and the PC Financial Money Account?

I can’t assistance but consciousness the full concern exemplary of attempting to propulsion prepaid products toward “premiumization” is doomed to fail, simply due to the fact that it conscionable doesn’t connection immoderate benignant of worth that a financially-savvy Canadian tin attain for escaped with constricted effort.

Then again, possibly radical who worth 2% currency backmost connected almond beverage via their favourite app-based outgo solution aren’t a conception of the marketplace that overlaps excessively overmuch with those who comparison each fiscal merchandise successful circulation.

Conclusion

Koho has launched Koho Extra Account. For $9 a month, cardholders summation entree to 2% currency backmost connected groceries, eats & drinks, and pre-authorized payments, arsenic good arsenic no FX fees and 1 escaped planetary ATM withdrawal per month.

This merchandise mightiness person immoderate worth to definite consumers, but for the infinitesimal I can’t assistance but consciousness that the full prepaid card hype mightiness conscionable beryllium a fad. This is the inevitable effect of selling that plasters “disruption” and “technology” connected apical of fiscal products that are inferior connected each cardinal level to accepted recognition and debit cards.

We volition spot arsenic clip goes connected if Koho’s stake pays off. For present I stay skeptical.

Until adjacent time, usage outgo methods that enactment for you. 

The station Koho Extra Account: Prepaid Going Premium? appeared archetypal connected Prince of Travel by Kirin Tsang.