Page 53 - Pay Magazine s2014

volume 7 • fall 2014
Canadian banks have started offering prepaid products, but we’re also seeing a lot of non- financial institutions turning to prepaid. For ex-
ample, the suretap mobile wallet [from mobile provider Rogers Communications] includes a virtual prepaid MasterCard. There’s also interest from the government and public sectors, where prepaid benefits programs are an opportunity to cut costs and drive financial inclusion. Municipal governments already have begun getting into prepaid for things like the Toronto Works benefit program. And, the federal government is expected to release an RFP for a program analogous to
the Direct Express Social Security program in the U.S., so that will be huge.
Prepaid also is popular as a companion account for those who may already have a bank account but like to use prepaid for online shopping or purchasing groceries or gas. While there are no-fee banking options, many Canadians do pay banking fees, so
having multiple bank accounts can be expensive. People are using prepaid as a separate purse for specific activities and to avoid worrying about overdrafting.
In the U.S., prepaid has become mainstream, with the entry of large financial institutions, such as Fifth Third and SunTrust, and products like Chase Liquid and American Express Serve providing a big halo effect
to raise awareness and educate consumers. That still hasn’t happened in Canada, where prepaid is largely unknown among consumers. There needs to be a tipping point to make prepaid mainstream and known. Canadian merchants might be able to drive this, be- cause the retail sector is relatively concentrated; you’d only need a few major retailers to bring out a prepaid product for it to happen.
—Shekhar Sahgal, VP Product Management, MasterCard
As a leading issuer of pre- paid cards in Canada, we see more than enough business potential in prepaid to be excited about. The virtual prepaid space is growing fast in Canada. Peoples Trust issues virtual vouchers for the 3V Visa program; these vouchers can be bought at select retailers and used as a virtual prepaid card to make purchases online. We’ve also received
requests from physical card programs interested in adding a virtual card for online or mobile purchasing. On the mobile side, we recently worked with InComm to provide a virtual prepaid card for Rogers Communica- tions into the suretap wallet. Prepaid cards and mobile are a perfect match, especially for younger users, who may not have access to a credit card, but have a mobile phone. The majority of retailers in Canada already have a contactless terminal in place in-store, and the growth of omnichannel shopping means mobile is an increas- ingly important part of shopping in stores. The Cana- dian corporate incentives market also is growing. We’ve seen multiple providers from the U.S. come into Canada. American corporations that also have a presence in Canada are a big driver of this trend.
The biggest change over the past 18 months was
the new federal prepaid regulations, effective May 1.
In summer 2012, in anticipation of the regulation, we eliminated fees after purchase for our Vanilla prepaid cards, putting us ahead of the curve. Now, the market is playing on a level field and all [federally regulated] payment providers are playing by the same rules. Although there may have been some negative connota- tions around prepaid in the past, the new regulations raise the industry to a new level of professionalism.
—John Pals, COO, Peoples Card Services
For more on Peoples Trust, see our Innovators’ Spotlight section on page 27.
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