In an ironic twist, the Occupy Wall Street movement, which, two years ago, galvanized resentment against Wall Street and gave birth to the phrase “the 99%,” has given birth to something new: a financial institution.
Or, as they call it — the Occupy Money Cooperative.
“We launched [the Occupy Money Cooperative] because we felt that the way the for-profit banking industry operates in the U.S., it intrinsically exposes the U.S. economy to risk and makes us vulnerable to the consequences but, above all, fails many millions of Americans who don’t have bank accounts and are denied banking services,” founder and director Carne Ross, of the non-profit advisory group Independent Diplomat, said.
He said the Occupy Money Cooperative, which was created by a small group of volunteers who met in Zucotti Park two years ago (see the board membershere), will provide access to financial services, particularly to those who are denied them by the for-profit banks.
On the site, the cooperative pledges that it:
- “Will offer access to low cost, transparent, high quality financial services to everyone.
- “Will actively and directly encourage the development of innovative financial services that will foster financial inclusion, and lead the field in terms of openness and fairness.
- “Will lead by example to affect a positive change for our members and stakeholders, and provide an uplifted standard of conduct for the financial community.
- “Will actively work with business partners and organizations that demonstrate a commitment to the well-being of their communities.”
Like a credit union, the cooperative will be owned and controlled by its members.
However, Ross says the cooperative will have a crucial distinction from credit unions: “[Credit unions have] restricted membership, a defined membership, whereas we will be a cooperative that anybody can join. But at this point, we’re not offering anything like the services of a credit union, where you can have a checking account or savings account. We’re not offering those services at this point, but we hope to eventually.”
Already signing up members, The Occupy Money Cooperative is in the process of raising money. Within a few days, the site will have a page for donations from members and non-members.
Once it gets sufficient funds for staff and other operating expenses, it will launch its first product:The Occupy Card, a prepaid debit card that will cost 99 cents a month.
When asked whether, like many other prepaid debit cards, it will charge for ATM withdrawals, balance inquiries, reloading the card, transaction statements, declined transactions and more, Ross said that the details of the card would be revealed when the card is launched.
“Like any prepaid card, there will be a range of fees. We hope the Occupy Card will be among the best value on the market, and one thing we guarantee are that all of its costs and fees will be completely transparent and clear to the consumer,” he said.
However, he added that since the coop will have no shareholders, only members, the more card customers it draws, the lower the fees will be. Also, as the coops grows in size, it will have more power to negotiate deals for members.
Greg McBride, senior financial analyst at Bankrate.com, said that with the few details offered so far, it’s hard to tell how Occupy’s debit card will compare to other offerings out there.
Prepaid debit cards have had a reputation for gouging their customers with fees for everything from checking the balance to calling customer service to reloading money onto the card.
“The landscape has long been populated by fee-laden cards, but we’re starting to see the large national and regional banks coming into the marketplace with low-fee, very transparent offerings that, over time, will help marginalize the higher-cost cards,” McBride said.
Some examples he gave of such cards include the Chase Liquid card, Fifth Third Bank’s Access 360, PNC Bank’s Smart Access Card and the Regions Bank Now Card.
Prepaid debit cards have long been thought mainly to be for lower-income consumers who either don’t want a traditional checking account because they can’t pay a high monthly fee or $35 for an overdraft or who can’t get such an account because of a personal history of overdrafts, McBride said.
And this population is a sizable one: In 2011, one in four households was unbanked or underbanked, which means they conducted some or all of their financial activities outside the mainstream banking system, according to the Federal Deposit Insurance Corporation.
And though only one in ten households used a prepaid debit card in 2011, the use of such cards among the unbanked climbed from 12.2% in 2009 to 17.8% two years later, the FDIC says.
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But many middle- and upper-income families have also begun using them, for instance, to give their children spending money for college or camp, or to place a built-in cap on their spending while on vacation.
Ross affirmed that the Occupy Money Cooperative’s mission to help the unbanked and underbanked was the reason it chose to begin with a prepaid debit card.
“They are the largest users of prepaid cards, so inevitably, they will be our primary target market, but anybody can of course use our cards. Membership at the coop is open to anybody who uses its services,” he said. The group also aims to make education part of its mission.
So, while it remains to be seen how the Occupy Card will compete against other offerings, the question that will interest even those not in the market for a prepaid card is: To get FDIC insurance, which the cooperative promises, which bank will the Occupy Money Cooperative team up with?