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State of the Industry:
ChangIng but Unbroken By Loraine DeBonis, Editor-in-Chief
Thinning margins and new regs may reshape the prepaid industry, but they won’t break it.
In March, the European Parliament approved interchange caps that will leave some prepaid providers
searching for new business models, while the U.S. market submitted comments to the CFPB on what’s likely to be the most sweeping reg- ulations of prepaid to date. Add to that, rising compliance costs on both sides of the Atlantic and lingering consumer awareness issues, and it’s no surprise we’re seeing consolidation.
As the industry grapples with this new world order, there’s a silver lining. While bitcoin and other would-be disruptors battle for legitimacy, prepaid has paid its dues. And, as electronic payments continue to displace cash and checks and mobile commerce gains a foothold, prepaid will be there.
“There’s still so much green field,” says Michael Fiore, global head of prepaid at MasterCard. “Prepaid solutions can be applied to almost every type of payment across any demographics—from families that want to empower children at school and employees using health care benefits to traditional under- banked consumers. We’re nowhere near mature in terms of penetrating all the use cases for prepaid.”
Stacy Pourfallah, vice president, global prepaid products at Visa, agrees that there’s plenty of room for growth and quite a bit of innovation happening. “Program managers are using their flexible platforms to continue to meet the needs of the underbanked and address additional consumer and business payment needs, which