Junio co-founders Shankar Nath and Ankit Gera were former Paytm executives. During one of the many frequent meetings before starting Junio, Shankar's school-going daughter messaged asking for OTP.
She was transacting online on Zomato. Shankar’s card was pre-fed in the Zomato app, but the OTP would still come to him. Without knowing where and how much money was being spent, Shankar gave away the OTP.
The incident triggered the idea of Junio, which is a smart card for children, who can transact offline or online, using the digital pocket money loaded by parents through an app.
The founders realised such a card would not only help the tech-savvy children learn to earn, spend and save money, but also ensure they are never out of money during an emergency situation such as leaving school early by taking an Uber or purchase a personal hygiene product without requiring to get an OTP from a parent, who is either at work or just not around. Plus, it gives the parents visibility of the child’s spending behaviour, which they can control through the app.
The founders were inspired by Greenlight, a US-based fintech company that provides a smart debit card designed to help parents monitor their child's spending habits.
Junio Co-founder Ankit Gera says, “The vision of the product is to inculcate the behaviour of saving. The card that we ship has the famous quote by Warren Buffett, 'Do not save what is left after spending rather spend what is left after saving.' That is the broad vision of the product. For example, the child wants to buy a bicycle worth Rs 5,000. Now, the child knows, if Rs 500 is saved every month, a bicycle can be bought in 10 months.
The Junio Card has been launched in association with RuPay and RBL Bank. Wherever RuPay is accepted the online and offline card works there. “Parents and the child have their own needs from the product. Child needs a payment instrument, a cool-looking card that gives good rewards, where they don't need to be reliant on parents for OTP. That’s their ask along with the ability to earn more pocket money than earlier through household chores,” says Ankit Gera.
On getting the parents onboard, Gera says, “They will learn that this product is far safer as there is a limit on how much a kid can spend compared to handing over a credit/debit card or linking online payments on the child's phone.”
Since launch in mid-2021, the startup has disbursed 300,000 smart cards for kids. Interestingly, the share of the user base is split evenly between kids in Tier-1 and Tier-2 cities and beyond, driven by the widespread adoption of digital payments pan-India.
Junio competes with similar new-age fintech platforms such as Fampay and recently raised nearly $2 million with some of the leading fintech founders such as Ashneer Grover of BharaPe, Yashish Dahiya of PolicyBazaar, Kunal Shah of CRED and others participating in the round.
“We are not a neobank. We want to be an instrument through which parents can teach some value of money to kids. Everything will revolve around that. We will give options to open bank accounts, create recurring deposits... So, all the neo-bank features will eventually come up, but every action will revolve around making kids financially smart,” Junio co-founder Ankit Gera told CNBC-TV8’s Akhil Vishwanath in an interview.
Here’re the edited excerpts from the interview:
How does Junio work? What are some of its key features? And, how does it lead to making a kid financially smart?
Ankit: In India the concept of pocket money is more of an ad-hoc ask: the child asks for money and the parent gives it. There is no track of how much money is given and where the money is being spent. So, then comes the question of giving the pocket money in a digital way rather than cash.
That is the first feature of the app. Give pocket money in the form of a physical card rather than cash. Parents have the visibility of where the card is being used and where money is being spent. They see the entire transaction history. Now, because there is visibility on the amount that has been given, the discussions such as, 'I have already given you Rs 2,000 this month, this is the max you get!' Those kinds of discussions can happen.
Once the budget is fixed, it makes the child decide if a particular thing is wanted or not. Earlier the kid would just ask for money and get it. Now, the behaviour is, if the child is given Rs 2,000 per month and they should decide where to spend and how much of that amount needs to be saved for future big ticket items.
Given the age-old concern around letting kids handle money or financial instruments such as a debit card, what are the controls a parent has over the product including setting a limit on the money a kid can access?
Ankit: There are some safety limits built into the product so that misuse of the product doesn't happen. Keeping that aside, there are some regulatory limits - minimum know your customer (KYC) product. So, it's a Rs 10,000 spend per month limit. That is significantly higher in terms of the pocket money most kids get in India.
Parents can set category-wise limits. For instance, 20 percent for fuel, 50 percent online etc. Also, they have visibility of where the money is being spent. They can block a particular merchant or a shop if they don't want the card to be used there again. They can switch on and switch off the card in case of an emergency, if the card is lost. These are the functionalities built into the app for parental guidance.
What are the other features of the Junio Card including the option for parents to set tasks for kids and give rewards upon completion?
Ankit: There is a feature called Saving Goal. Right now, what happens is, if a child wants a big ticket item, let's say, a bicycle worth Rs 5,000. Parents might buy it and the child could use it for a few months before discarding it. On Junio, the parents and the child can together set-up a savings goal of Rs 5,000. "If you save Rs 2,500, we shall top it up with Rs 2,500!"
This not only teaches the child how to save money, but also how interest-compounding works. It's a notional interest that a parent is paying, but the child learns how interest works on savings. The savings goal can also be long-term such as studying abroad. Parents and the child can both continue depositing money.
The other feature is setting up tasks. Parents can incentivise good behaviour in a child. For example, "Do your bed everyday and I will give you Rs 100!" Even though they are incentivising, the expectation is that the child will build those habits and this incentivisation will be helpful.
What are some of the interesting trends you’ve been witnessing? What are some of the top categories where kids are spending their money?
Ankit: An interesting trend is that the card is being used on grocery apps like Grofers and Big Basket. This was surprising for us. Pocket Money is usually not spent on these apps. When we spoke to the parents, we realised this is part of the tasks. The parent has outsourced buying groceries, paying bills... And, are intensivising the kids for these tasks.
Through this, the child is learning about the money that is required to buy groceries, what the electricity bill of the house is, whether it is high or low... Because, once you do digital payments, you don't feel the value of money. Even if it's a Rs 100 or a Rs 1 lakh transaction, it's a matter of OTP. By these interactions and incentivisations, the value of money is being taught to children.
What’s your approach to attract and keep both parents and kids in the loop to educate them on being smart about money? How are you planning to do it through either marketing or educational campaigns?
Ankit: We are in talks with one of the biggest school chains, where educational videos will start playing. We will do partnerships with the likes of BYJU's. In future, you will see school canteens accepting Junio cards, where cash and coupons work because phones are not allowed. So, QR codes are out of the question. But, Junio Cards will work at the canteen PoS machines. The Junio Card can also be merged with the student ID card.
Explain the Junio business model. How do you plan to generate revenue?
Ankit: One line of revenue is the card MDR. So, when the card is used at a merchant, we earn a certain percentage from it. But, we all know that payments is a low-margin business. We don't want to focus much on volumes or transactions in payments as we already have the likes of Paytm. There is no point competing with Paytm because even if we win, that doesn't bring in a lot of money. So, that is not the key focus.
From the research we have done so far, similar companies in the US, the UK and Australia work on a small subscription model. The counter argument is that subscriptions are difficult to crack. We understand that India is a different market altogether. That's why our focus is to make this app meaningful for parents. They should see it as a financial literacy instrument for kids and that's when the small subscription model will not matter much.
Currently, we are not running subscriptions as we are building the product. We are still educating users on what the product can do for them. Once the thought is well-established, that's when the real revenue will come in.
Ankit: Since launch, we have issued around 300,000 cards. Out of which, 100,000 are physical cards. The total volume that has flown through us is Rs 10 crore worth of pocket money. Out of which, Rs 5 crore was recorded in October. We don't track this actively.
We focus on the number of transacting cards in a month. This shows that the child is active on the platform. We don't want to increase the money a child is spending. Currently, we have 75,000 monthly active users.
Currently, Junio has a user base of 300,000 kids. What are the targets from a near-term to long-term perspective?
Ankit: By the end of FY22, we want to reach 600,000 kids. And, an equal number of parents. We have seen that it is 1:1. One parent and one child sign up together. Some of the school partnerships should also start by then.
What are some of the challenges ahead given the competition from similar new-age startups and the threat of a traditional bank bundling a service for kids by linking it with the parents’ accounts?
Ankit: The internet penetration has gone up and the prices of smartphones have reduced. Plus, because of edtech a lot of kids already have smartphones. So, some of the problems are already sorted. But, educating the parents that this is something they need and then converting it to subscription cost is the biggest test.
However, in India, there aren't many companies who have been able to successfully implement the subscription-based model. Our payments industry is not ready yet. With the latest RBI guidelines, the subscription businesses are not growing much as cards are getting declined. So, regulatory challenges remain.
My knowledge of competition is limited to seeing it as a user, reading and talking to VC funds, who once considered investing in them. All of them point out that these startups, who are in the similar space as us, are focussed more on the number of payments and the amount of pocket money being spent. That's the key differentiation between us and them. We are not driving payments and volume.
Other startups are talking about the volume of pocket money that is being spent. We will speak about how many kids are saving money and how many savings goals are being created on the app. And, what are the savings goals being set whether it is buying a bicycle or studying abroad. Our app is more around the interaction between a parent and a child. Other apps are mostly payment instruments. I would see it as Paytm for kids. As of now, that is how we are different in our execution.
So far, Junio has raised around $2 million in seed funding with participation from leading fintech founders such as Ashneer Grover of BharatPe, Kunal Shah of CRED and others. What are your future fundraising plans?
Ankit: We are looking to close another funding round in 1-2 months. It is going to be a very big round for us.
(Edited by : Bivekananda Biswas)
First Published: IST