Hong Kong startup Neat has launched prepaid credit cards incorporating facial-recognition technology.
The cards are aimed at filling a gap created by traditional financial institutions: students and first-time jobholders being unable to obtain credit cards because of a lack of credit history.
“We are targeting the millennial demographic, students or young professionals, who don’t necessarily qualify for a credit card because they do not have a credit history, or might not want a credit card because they’re afraid of getting into debt,” says Neat CEO David Rosa.
“For this group of people, if they cannot have a credit card it’s difficult to shop online… It limits their financial freedom.”
Rosa says banks in Hong Kong do not offer debit cards as they are less lucrative than credit cards in terms of interchange fees. These are transaction fees charged to merchants when customers use a credit or debit card for purchases.
“The interchange fee for credit cards is much higher than for debit cards, and for credit cards there is interest when you forget to pay or can’t pay your bill,” says Rosa. “This means there is little incentive for banks to offer a debit card.”
With Neat, users download the app, fill in their details and upload proof of address and a photograph of their passport details page. The Neat app then prompted users to take a “selfie” which is compared with their passport photo.
If all the details line up, users are immediately issued a virtual “prepaid credit card” they can use for online purchases until their actual card arrives in the mail.
Money can be added to the Neat card by depositing cash at more than 200 Bank of China deposit machines around Hong Kong or by doing an online transfer to a designated bank account. The money is added to the user’s prepaid card within one working day.
Rosa says the company also plans to roll out a feature this year that lets users link their bank accounts to the app so they can top up their credit cards directly.
Neat automatically categorising spending so users can see how much they have spent in categories such as food, entertainment and travel for each week, month or year.
If users misplace their card, they can disable it through the app to prevent fraudulent spending while awaiting a replacement card.