“It remains to be seen if it’s good in the long run but what’s exciting is Amazon has proven the ability to move product,” said Ben Gottlieb, president of mobile app maker Stand Alone Inc. “It all depends on the implementation. But if they live up to what they say, we can make more money.”
That’s a real issue. Gottlieb, who sells a crossword app, says he makes 20-30 times more selling his apps in the App Store compared to Android Market. It’s gotten a little better lately, but it’s still discouraging trying to sell in Android Market, which has more than 80,000 apps. Developers like Gottlieb say the store needs more recommendation and discovery tools, more categories, a better check-out system and more marketing muscle. These are all things that Amazon could immediately address.
Arron La, maker of the Advanced Task Manager app, said Amazon could help ignite sales by giving better recommendation tips and making checkouts easier for users. He said Google Checkout can be a nightmare at times, sometimes charging people multiple times for one app. A reliable and familiar system like Amazon’s could prompt people to open up their wallets, something they don’t do that much of in the Android Market. He also hopes that Amazon will do more to promote apps and advertise its app store, which Google has shied away from.
Google, for its part, is working on a number of changes, including a new web-based Android Market and a reported deal with PayPal for payments. And it just expanded the number of countries that can buy paid apps.Even with those improvements, La feels better about Amazon because the company seems more committed to making money, something Google seems less interested in. Google claims it doesn’t make any money from Android Market.
“Once you have the right things in place and you get that ecosystem going, you can definitely make money out of it,” he said. “But that’s been what’s hurting Android Market. Everyone using Google devices, they want and expect everything for free. When Google released Android market, they had no paid apps in the beginning.”
To be sure, an Amazon Android store or a similar market from Verizon Wireless could be a headache for developers. Developers would have to get in the habit of submitting and updating apps in multiple markets. Users might get confused as to who to turn to for apps or support. Amazon will have the ability to turn down apps and has stated it won’t approve offensive or pornographic content. It could lead to some gripes from developers about rejected apps, similar to complaints about the App Store, and it’s unclear if it will be as easy as one click to buy an app and get it on an Android device.
If Amazon proves to be a real player in the app market, expect a lot of developers to look Amazon’s way. They’ll be happy to get something closer to an App Store experience for their apps. “Apple is about the making the whole experience pleasant while Google is just focused on getting the job done and it’s not always pretty,” Gottlieb said. “Amazon is somewhere in between and it’s definitely closer to Apple than Google.”
Related research from GigaOM Pro (subscription req’d):
- Why Google Launched App Inventor
- Is Amazon the New Self-Publish Kingpin?
- Why Carriers Still Hold the Key to Handset Sales
This was probably inevitable: the minute that Dodd-Frank cracked down on the fees charged by credit cards aimed at students, some other bright financial innovation would crop up. This time, a debit card aimed at students. Which carries lots of fees. Ylan Mui reports that a company called Higher One has started signing up colleges around the country, taking on the burden of providing cash to students. In return, it gets lots of fees:
Students say several of the fees associated with Higher One’s card are particularly irksome, including the $19 inactivity fee, a 50-cent charge for using a PIN to make a purchase rather than a signature, and a $2.50 fee for using other banks’ ATMs…
Higher One said that only 1 percent of customers have been charged an inactivity fee and that more than half are charged the 50-cent fee only once. All fees are listed on Higher One’s Web site, along with tips on avoiding them.
“We have a big effort with educating students on how to use the account,” Smith said. “We’re very passionate about financial literacy.”
If the fees are listed on Higher One’s website, they’re not exactly prominent. I did find this page, eventually, via this blog entry, but it just says that “when you swipe & sign, you won’t be charged the PIN-based transaction fee”. I haven’t been able to find a page showing a 50-cent transaction fee anywhere*, although I did manage to find this page, showing a $25 fee for domestic wire transfers and a $50 fee for international wire transfers. “Higher One offers less costly alternatives for transferring funds”, it says, without giving any indication what they might be; I suspect that what they’re talking about is transfers to or from people who have already registered somehow with Higher One.
It should go without saying that any firm which is “very passionate about financial literacy” would encourage, rather than penalize, simple, cheap and safe PIN-debit transactions. It would not give students a debit card and then tell them that if they want to avoid fees they should select the “credit” option rather than the “debit” option when they come to pay.
And I can’t think of any good reason to charge a $19 inactivity fee to people who haven’t used their cards in 9 months.
The fact is that students are often very naive when it comes to money, and it’s easy to gouge them once or twice before they learn that banks are not necessarily on their side. If you can get your card accepted by a majority of freshmen every year, and then come up with all manner of weird fees to hit them with, that’s a great way of making money out of ignorance.
Meanwhile, all students should have a bank account: giving them a debit card instead only serves to maximize the number of unbanked students. So while I’m sure cards like this are attractive to colleges, it would be great if either the colleges or else the Consumer Financial Protection Bureau started being a lot more critical of them. Prepaid cards only ever make sense if the alternative is being completely unbanked; that should not ever be the case for students.
*At Southern Oregon University, Higher One agreed to waive the 50-cent PIN-debit charge, but only if there was a simultaneous “swipe-and-sign” campaign. If the campaign is unsuccessful and students do the sensible thing by using PIN debit, then the university can be charged $2 per student for “PIN fee elimination”.
Update: Higher One’s Donald Smith responds:
Higher One was founded 10 years ago by three college students (undergraduates at the time) who were looking for streamlining the way financial aid refunds were distributed to students. Today we work with more than 675 campuses across the country, have a 97% client retention rating, and an A+ rating with the BBB.
The OneAccount is Higher One’s optional, no minimum balance, no monthly fee, FDIC-Insured checking account created by students for students. We do not offer a stored value card. We are very open with our fee schedule. We post it on every program website for all to access, explain each fee, discuss how to avoid each fee, and provide students with a web page that tells them how to use the account for free (which you’ve already found). Because of this, we believe that our customers pay less than half the amount in fees that the average bank checking account customer pays per year.
Two of the fees you referenced in your blog are the PIN fee and the Abandoned Account Fee. The PIN fee is easily avoided by choosing a signature based transaction at the checkout. The majority of students uses it in this manner and is in turn protected by MasterCard’s Zero Liability Policy against fraudulent charges (a safer way of purchasing than a PIN based transaction). We do not have an inactivity fee on our fee schedule – we don’t penalize students who do not use their accounts. We do have an Abandoned Account Fee of up to $19, for those who have abandoned their accounts, but this has been charged to less than 1% of all OneAccount holders in our company’s history because of our proactive outreach plan.
Higher One offers no instruments of credit. As a matter of fact, we’re generally in favor of initiatives restricting students’ access to credit cards and promoting financial literacy. This is why we offer a full range of financial literacy resources along with the services we provide.
I particularly dislike the implication, here, that PIN-based transactions are unsafe. They’re not; they’re just less lucrative, in terms of interchange fees, than signature-based transactions.
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