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Back to School with the Walking ATM

August 11, 2009

paypal-copyParents — ever feel like a walking ATM? Want to teach your kids about responsible financial management (and get them to stop pestering you for their allowance every week in the bargain?)

Check out PayPal‘s new program for students, launching today, in which a sub-account for your child is linked to your own PayPal account.

The program, Student Account, is designed to balance convenience for parents and their kids with financial responsibility, said Don Fotsch, vice president of customer experience and design at PayPal.
    
It’s also a push by the fast-growing online payments company, which is eBay Inc’s growth engine, to expand in new directions. The program addresses a “clearly underserved” market of the estimated 17 million students headed to college in the United States this year, Fotsch said. 
    
PayPal currently has about 75 million active account holders across the globe. 

Fotsch said the question asked by the program’s designers was: “How do we deliver for the kids financial independence and optimize financial learnings … and for the parents to support financial responsibility?” 
    
Parents can transfer money to their kids’ accounts in “allowance mode” or “on-demand.” Requests for money from kids can be sent by text on cellphones and transfers are automatic performed once mom or dad approves.                         
    
Students also get a debit MasterCard to use in stores or use to take out cash.
According to Fotsch, what parents like best about the program, which has been in test mode for half a year, is the ability to track expenditures since the account details each transaction.

Other online companies are similarly hoping to tap the hot student market. Earlier this year, BillMyParents.com launched a program that allows parents to approve or reject their teens’ online purchases.

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