Prepaid Customer Service Takes Center Stage at Philly Fed Workshop (Feb. 26, 2013)
Feb. 26, 2013
The Payment Cards Center of the Federal Reserve Bank of Philadelphia hosted a workshop last week focused on customer service in the prepaid card industry. Susan Herbst-Murphy, a senior industry specialist at the PCC, says the center was eager to learn more about customer service issues in light of the Treasury’s mandate to move benefits disbursements to electronic payments as well as other disbursement programs using prepaid cards. “There’s some inherent friction in providing a bank product to a previously unbanked population, and it comes with some challenges,” Herbst-Murphy says. “Margins in prepaid are very thin, and one of the things we learned was that one customer service interaction can tip the balance as to whether that account will be profitable in a given month. The sustainability of these programs is of interest since they deliver cost savings to the government and value to recipients.”
The private workshop, which included a presentation from customer service company Contact Solutions, was mainly for PCC and other Federal Reserve Bank staff, although some prepaid providers were invited. “Overall the takeaway was encouraging—this is an area where a lot is at stake and we were glad to see the industry seems to be moving forward,” says Herbst-Murphy.
“We really believe prepaid is at a crossroads,” adds Justin Lemrow, director of continuous improvement at Contact Solutions. “Traditionally, the contact center is viewed as a cost center, but when optimized it can increase consumer loyalty and overall profitability,” he adds, noting that shifting 5 percent of agent calls to IVR can increase a program manager’s gross margin by 20 percent.
“There’s an assumption that cardholders don’t want to self-serve,” Contact Solutions CEO Paul Logan tells Paybefore. “Consumers don’t hate self-service; they hate bad self-service. There is amazing new technology that can recognize patterns and attributes of consumer behavior and adapt in real-time to how callers are behaving in the IVR to make it a personalized experience. That could be a game-changer in the prepaid industry where margins are tight but competition is high.”
The PCC plans to publish a report on the workshop later this year. In the meantime, Bob Hunt, vice president and director of the center, says he hopes this is the start of an ongoing discussion. “We think it’s the beginning of a conversation about the role of customer relationships in prepaid. Where we go with it will depend on the information we can get from industry,” he says.