Here’s a Neat solution for millennials without credit cards in Hong Kong

Hong Kong students and first-time jobholders who bemoan the difficulty of obtaining a credit card from banks in the city can now turn to Neat, a local start-up that approves prepaid credit cards for users instantly through facial recognition technology.

Neat, which started launching its cards in early December, aims to fill the gap that traditional financial institutions have created because students and first-time jobholders often lack a credit history and can be perceived as “unprofitable” for banks.

“We are targeting the millennial demographic, students or young professionals who ... don’t necessarily qualify for a credit card because they don’t have a credit history, or might not want a credit card because they’re afraid of getting into debt,” Neat’s chief executive David Rosa said.

“For this group of people, if they cannot have a credit card, it’s difficult to shop online ... It limits their financial freedom.”

One problem was that banks in Hong Kong did not offer a debit-card solution, Rosa said, because debit cards were less lucrative than credit cards when it came to the interchange fee. Interchange fees are transaction fees charged to the merchant when a customer uses a credit or debit card to make a purchase from their store.

“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,” Rosa said. “So there is little incentive for banks to offer a debit card.”