Orange becomes more like bank: launches overdraft facility
Pay £1 to get £2.50 into debt
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Mobile phone customers signing up to Orange's new Speakeasy pre-pay tariff can get themselves £2.50 worth of overdraft facility to keep them connected when their credit runs out, though they'll have to pay £1 to sign up for it.
The overdraft facility, branded "Reserve Tank", is part of the new tariff which also includes three "Magic Numbers" that are only charged at 15p an hour, and a flat 15p a minute rate for calling anyone else.
Pre-pay systems already put the mobile phone operators in danger of becoming banks. It's OK in principle for a company to take pre-payment for one product - phone calls or books, for example. But mobile phone credit is used for all sorts of things including buying ringtones and games, downloading music, and entering dodgy TV quizzes.
This makes the mobile phone companies look suspiciously like banks - they store your money for you and allow convenient access to buy things. The only thing they don't do is pay interest.
If the mobile networks became banks they'd have to sign up to the banking code of practice and open their accounts to a lot more scrutiny. The UK's financial services regulator has been very cautious about imposing more regulation on such a dynamic industry. But if companies are offering overdrafts, this will draw attention to the fact that they are operating as banks in all but name.
Perhaps if they were banks they could start paying interest. ®
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COMMENTS
Forget Orange what bout Oyster
Over 10 million cards have been issued of which around 5 million are in regular use. As of March 2007, more than 80% of all tube and bus journeys use Oyster. Around 22% of all tube journeys are Oyster pay-as-you-go, around 4% cash.
Whos getting the intrest on all the funds we all store on Oyster cards ?
Some one is holding a lot of our cash, I wonder where it all is and what its all doing.
Interest
Banks paying interest on a current account? Since when?
With the notable exception of the old building societies (eg Alliance Leicester) the big banks can hardly call what they pay interest. Barclays, Natwest & HSBC all offer 0.1% on their current accounts - it wouldn't make a great deal of difference if Orange had to start paying that!
(personally I stick with A&L, 6.5% on current account, 10% on regular savings - Barclays should be ashamed of themselves)
Vodafone anyone?
Vodafone Ireland has had this service in operation for a couple of months now, it's called 'Vodafone IOU'. The deal is it's €2 when your credit runs out, you need at least 0.01c in your a/c to send the text which is a pain in the behind.
Then, when you top up next, they charge you 0.15c for the service they provided.
It's still 0.15 for nothin, but at least it isn't as bad as this Orange deal!
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