Waspit Giving Students What They Want with Social Media-Centric Program (December 2012)
By Bill Grabarek, Senior Editor
Crossing the pond and moving its headquarters from the U.K. to New York City, Waspit Inc. is creating a buzz on college campuses with a unique marketing style for its mobile banking product that’s heavily steeped in social media.
Waspit users can make purchases with a Waspit prepaid card or contactless RFID sticker attached to their smartphones, access their accounts online or through Android and iOS apps, request and send money to friends and family, pay bills, transfer funds, receive relevant daily deals from merchants and “split the bill” at restaurants. They also can earn Buzz Points for nearly everything they do on Waspit. Buzz Points can be redeemed for gift cards for Amazon, American Airlines, Best Buy and Footlocker, among others.
After paying an initial account verification fee of $1 to $2, Waspit users pay a $2 monthly fee only if they choose to receive both the prepaid debit card and the mobile tag; otherwise, there is no monthly fee. Users pay fees for international purchases or using an ATM outside of the STAR network. Accounts can be loaded through direct deposit, linking to a checking account or via P2P.
“We’re not a bank trying to develop a product that will appeal to students. We developed a product based on what students wanted and we’re only focusing on students. This product was developed from the ground up.”
—Richard Steggall, Waspit
The current incarnation of Waspit was born out of a basic mobile payments platform introduced to U.K. consumers in 2010, according to Richard Steggall, founder and CEO, Waspit Inc. Designed for mass appeal across a broad age range, the platform resonated mostly with consumers in their late teens to early 20s, who were vocal about the features they wanted in a mobile banking platform. They wanted to be able to link the application to their social media accounts so they didn’t have to memorize another password or URL, or download another app to their smartphones, he says.
Armed with that feedback, along with months of field research conducted on college campuses in the U.S., “We went back to the drawing board and quite literally [redesigned] our platform entirely,” Steggall tells Paybefore. “We came up with what we now refer to as the interactive social banking platform for students, which ties in all the core banking functionality a student could possibly want.”
And then some.
“People love sharing their opinions and seeing those of their friends,” Steggall says. “As much as sites like Yelp have been successful, you’re reading the opinions of strangers. You value the opinions of your friends and people you know far more.”
To that end, Waspit users can sync their accounts with social media sites, enabling users to, for example, automatically “check in” on Foursquare, share their experiences and upload photos with friends on Twitter and Facebook, and exchange money through major social media services with friends who use Waspit.
Honey for Waspit
Waspit Inc., provider of an interactive social banking platform for students, on Dec. 11 announced it has secured $3 million in additional funding from a group of New York-based private investors. Waspit, which has offices in New York City and the U.K., plans to use the funding to enhance its sales and marketing efforts, as well as to continue rolling out additional features for its users.
“We are thrilled to receive this additional funding, which comes from investors who have taken a long-term, strategic view on our unique business model,” said Richard Steggall, Waspit founder and CEO. “Their commitment to Waspit highlights the tremendous growth potential that exists for our brand and reinforces our goal of being the complete banking and social commerce tool for students.”
“It’s adding functionality like that that has made this a unique banking alternative using the prepaid rails, yet it’s still an FDIC-insured account,” Steggall says. “It’s truly interactive.”
Since Waspit’s prelaunch campaign in September and official launch in early October, the company has received 16,000 requests for invitations to join Waspit and approximately 5,500 registrations. Currently, the company is slowly onboarding users—necessitating the invitation to join—to ensure the platform is up to scale, Steggall says, adding that he hopes to remove that part of the process by mid-January.
Other back-end changes for Waspit in the offing will be switching to Redwood City, Calif.-based payments processor i2c and announcing a new issuing bank in January, although Steggall wouldn’t say which one. What’s more, the company plans to bring the U.S. iteration of the Waspit platform, with its improved functionality, to its U.K. customers during the second quarter of next year.
Much, if not all, of Waspit’s initial customer base is the result of the company’s on-campus ambassador program comprised of paid interns who promote the brand to fellow classmates on campus through word of mouth, events and, of course, social media. Interns are charged with creating an audience and then educating them about the new way to manage their money, according to Steggall.
“During the course of the internship, we get them to focus on a broad range of marketing skills,” he says. “We spend a lot of time getting them to help us develop localized marketing programs for their particular campuses. They really are getting a good perspective on different ways in which to approach the market.”
The ambassadors learn time management, create proposals, coordinate and execute events, determine marketing channels, run the Waspit Facebook page and Twitter account for their school, and develop management skills. Recent promotions have included special movie showings, game-day activities around college sports stadiums and bar events for the 21-and-older crowd.
Waspit employs 96 ambassadors on more than 30 campuses—a few colleges in California, but much of them are in New York, New Jersey and Connecticut (see list below, right). By mid-2013, the company hopes to be on 60 campuses and have 60,000 users. Enabling Waspit to market its product on college campuses is the fact that it doesn’t offer credit—something credit card companies have found nearly impossible to do since passage of the CARD Act of 2009.
“Initially, we were trying to find ambassadors anywhere and everywhere. There were some campuses we definitely wanted to get on and, in some cases, we were successful,” Steggall says. The company, he says, targeted campuses based on several factors—large and small student populations, various demographics, prevalence of contactless terminals, etc.—to gauge how these factors affected the product’s take-up.
Waspit is on the following campuses:
“Once we got an initial footprint, we then would try to get three [campuses] relatively close to each other … [to] create a nucleus within that geography. You have merchants that become used to people paying with Waspit,” Steggall says, adding that merchants do not need to do anything differently to accept Waspit as payment.
Competition and Consumer Watchdogs
Whether it’s established prepaid players already on campuses or government and consumer groups keeping close tabs on the industry, marketing prepaid products to college students can be a tough nut to crack.
Within the past 14 months, several campus card programs have been announced or expanded. In most cases, these cards double as student IDs, but they are still GPR prepaid cards at heart. Despite the level of competition on campus, Steggall predicts Waspit will be successful.
“We’re not a bank trying to develop a product that will appeal to students. We developed a product based on what students wanted and we’re only focusing on students. This product was developed from the ground up. We’ve rolled the best of everyone else’s platform into one,” Steggall says. “We’re one of the few companies that engages ambassadors to promote [Waspit] and be seen using it.”
Waspit isn’t bothered, either, by the critical opinions some legislators and consumer watchdog groups have of student prepaid cards, according to Steggall.
“I’m not concerned in the slightest about regulations on prepaid products because, ultimately, it will come down to the monthly fees and the transaction fees you can charge to use the card. We are very fair when it comes to fees,” he says.
“Where we make money is by our users buying merchants’ daily deals and gift cards through our platform, and there will be other avenues we’re going to move into that we will announce [early next year],” Steggall says. First and foremost, he adds, Waspit’s strategy is to charge users the absolute minimum. Waspit makes its money through a percentage of the interchange from transactions, as well as a cut of daily deals and merchandise, such as gift cards, selected by Waspit users.
So far, the company’s approach to fees, social media and marketing on college campuses has resulted in a respectable base of prepaid account holders in a few months. However, definitive growth of the product will be through “true viral take-up,” Steggall says. “Users saying, ‘Let me Waspit to you.’ Admittedly, it is a long-term strategy of ours, but that will be the ultimate takeoff.”