Waspit, an interactive social banking platform targets cashstrapped students

College students are usually cash strapped. Students find it difficult to save their earnings due to high transaction costs charged by the banks. A start up, Waspit, seeks to solve this problem.

Waspit was established by Richard Stegall in 2012. The company acquired $3 Mn through Venture funding from a group of New York based private investors in 2012. As of March 2013, Waspit had 5500 registered users, with another 16000 requesting an invitation to use the platform.

Waspit is an interactive social banking platform designed exclusively for students. For a fee of $2 per month, it provides online and mobile banking services to students, which are linked to their pre-paid debit accounts. Users are issued a MasterCard branded Waspit debit card, or a tag for their cellphones which allows them to pay by tapping at MasterCard PayPass terminals.

Waspit claims to provide deep social media integration. Allowing users to automatically check-in through Facebook and Foursquare, rate their experiences, and share them with their friends. All of this is done through their Waspit account. Waspit allows users to rate each experience and thus users can rate the same merchant twice. It shares these ratings with the friends of the users. For each engagement with the banking platform, be it ratings or purchases, Waspit provides buzz points to the users. The users can redeem their accumulated buzz points for rewards like Amazon gift cards. To promote its services among students, Waspit hires Brand Ambassadors in different university campuses, whose job is to inform other students about the services.

Waspit also claims to provide services like

  • Split the bill - a user can split the total bill amount with his/her friends

  • Friend Pay - allows users to send money to their friends as well as request money from them

  • Load and Transfer - users can send and receive money from multiple bank accounts

Waspit analyzes the spending habits of its users and provides targeted spend suggestions. Some of the deals which are passed on to the students include from companies like Groupon and LivingSocial. For example, if a student has dinner on weekdays between 7 p.m. to 9 p.m. at New York West Side Village, it can send a coupon at 6 p.m. depending on the user’s location and spending preferences. Waspit allows third party merchants to advertise to their user base for a fee.

Waspit also claims that it encourages financial responsibility in students. It does not provide any form of credit to students ensuring that they manage their finances better. But these claims are debatable, since the targeted ads provided by Waspit can encourage an impulse buying behavior among students discouraging them from saving. The students are charged a $2 monthly fee to use the card apart from the charges they incur for withdrawals. The fee for withdrawals at designated ATM’s is free and $2 at non-designated ATM’s.

LTP View: Waspit targets a niche segment, ‘students’ that cannot afford the high transactional rates offered by traditional banks. By understanding this business problem, Waspit may have found a way to leverage an untapped resource that possesses tremendous potential. Being one of the few companies to operate in this field, Waspit may have an advantage over other startups offering prepaid or banking services. With 5500 registered users and another 16000 students requesting an invitation to use the platform, Waspit could grow considerably in the near future.