Conference Coverage: Industry Leaders Outline Ways to Keep Prepaid Going Up
By Bill Grabarek, Senior Editor
The prepaid card continues to be the fastest-growing form of electronic payment, but to maintain that position in a world where emerging payments are gaining ground every day, the industry must keep innovating. That was the message from industry leaders who gathered at the NBPCA’s Power of Prepaid in Washington, D.C., last week.
For Amit Parikh, global head of prepaid and director of business development at Discover, the evolution of prepaid products is less about feature enhancements and more about improved consumer convenience and awareness.
“It’s about being able to go into hundreds of thousands of locations to do a cash reload,” he said. “We have to go where consumers’ struggles are, so it’s about convenience and awareness of the product and the transparency of what they’re going to be charged.”
The products’ ubiquity and convenience has and will continue to play a large role in the growth of the prepaid industry. A major part of the convenience factor is continuing to tap into mobile technology and offering real-time services.
Mobile technology is one way Green Dot Corp. is driving adoption of its products, according to Kostas Sgoutas, chief revenue officer. “Consumers expect their bank app to be as good as Facebook and Instagram. They expect a great user experience,” he said.
“If we’re able to deliver on that, they will tell their friends about it, which is a benefit for all of us. We also work very hard at providing technology like mobile deposit capture, enabling consumers to move money from one bank account to another, and [offering] P2P payments, to make sure consumers have all the conveniences they need with our products to make us their primary financial vehicle.”
It’s no secret that smartphone penetration is booming in the U.S., and with a majority of unbanked and underbanked consumers using smartphones as their only access to the Internet, there’s a huge opportunity for prepaid providers to turn the smartphone into a financial services hub. For example, Blackhawk and partner T-Mobile launched the Mobile Money by T-Mobile program, which includes a Visa prepaid card, smartphone app, money management tools and access to Allpoint’s surcharge-free ATM network.
“We’ve taken the explosive growth of smartphones and the rapid growth of prepaid, and the convergence has really manifested into this product we call mobile money,” said Anu Shultes, general manager, prepaid telecom and financial services at Blackhawk Network. The program delivers what equates to a bank account and a mobile wallet at no extra cost. T-Mobile isn’t relying on fee revenue for the program because the value to T-Mobile is derived from the wireless relationship, she explained.
“If we stop and think about all the advances for the un/underbanked segment over the last few years, many of them have been centered around prepaid and I think that’s a real tribute to our industry,” said Cecilia Frew, head of U.S. prepaid at Visa Inc. “And it bodes well for our future. We have been able to [make leaps] where banks are still struggling, [with such features as] real-time mobile check deposits and real-time payments. Consumers need … real-time options and technology is the way to deliver with speed and efficiency.”
Future of Brick and Mortar
With technology playing such a prominent role in the growth of prepaid, one might wonder what the future holds for prepaid offerings at brick-and-mortar locations. Green Dot and Blackhawk, two companies with a long history at retail confirmed brick-and-mortar distribution still is vital and growing.
Blackhawk distributes products in 93 percent of the grocery channel and a large percentage of the convenience store market, according to Shultes, and given the millions of shoppers in those stores every week, the company must have a presence in those locations. “Online is a very viable channel … but think about the beauty of the retail channel; the shopper is already there.”
Green Dot’s mission is to reinvent personal banking for the masses, said Sgoutas. “If you want to reach the masses, you have to be where they shop,” he said, noting that the company expanded its footprint by 27,000 new retail locations last year.
“What we’ve found over the last 14 years is that retail is a fantastic channel for reaching [the prepaid] customer,” he said. “We continue to see tremendous growth in retail and you will see us continue to invest a lot in traditional retail.”
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