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volume 8 • spring 2015
Of prepaid users—across card types—25.4 percent were likely or very likely to recommend prepaid, but detractors (those who selected 1-6 out of 10
on the Net Promoter scale) totaled 47.7 percent, dropping the overall Net Promoter Score to -22.3 percent.
Targeting millennials may be
a good strategy for prepaid companies because they can appeal to millennials’ budget- conscious mindset, and millennials aren’t as likely to have precon- ceived ideas about prepaid, Neri says. If the cards offer a robust mobile experience, all the better. “Millennials and digital natives have come to expect an integrated, personalized and mobile experi- ence,” he says. “The question is: Who’s going to do the heavy
lifting on marketing?”
American Express has put its considerable marketing muscle behind promoting Bluebird with Walmart and its proprietary Serve product. Happ tells Paybefore the company has achieved great mo- mentum in the past few years, but when you look at the size of the opportunity—40 to 70 million without bank accounts—penetra- tion across the industry should
be greater.
“I think it’s generational,” he sug- gests. “If your parents are banked, they make sure you have a bank account. If you’re from a family that hasn’t used traditional financial services or prepaid cards in the
past, then it’s harder to convince you to change your behavior.”
One of the features that’s helped American Express attract new Serve cardholders is its network of 27,500 free cash reload loca- tions. Direct deposit remains the feature that ensures the longest cardholder relationship, but Happ says Serve’s set-aside account to encourage saving is also popular with users.
“We’ve built good momentum and have great scale from an acquisi- tion perspective,” he says. “We’re confident we’ll see that momentum continue as 2015 unfolds.” He hints at the possibility of more differenti- ated products or features from the company. “It’s far too early to say, but there remains a lot of room for innovation in this space to precisely target segments based on consum- er need within the underserved population. It’s going to be a marathon not a sprint,” Happ says. “And, we’re going to keep running.”
Visa’s Pourfallah concedes that there’s still a lag between percep- tion and reality when it comes to prepaid. For example, payroll cards continue to receive negative press coverage despite the fact that card- holders find the cards beneficial. Visa payroll cardholder research from 2014 shows cardholders pre- fer receiving their pay on payroll cards, which they say help them better manage their money. Nearly 9 out of 10 payroll cardholders pre- fer to be paid via payroll card rather than a paper check, and 80 percent
of payroll cardholders would want to continue to receive wages on their cards if they changed jobs.
What’s In a Name?
One thing that may be holding the industry back in terms of consumer understanding may be the same thing that’s pushing it forward from an expansion perspective— its flexibility.
“Prepaid is merely a platform, it’s not a product,” says 2015 Paybefore Industry Achievement Award Winner Jeremy Kuiper, managing director, Payment Solutions, The Bancorp. (See page 8.) “Credit is a product, debit is a product, but prepaid is a platform for many of products.
I don’t think consumers think they have a prepaid card,” Kuiper says. “In their minds, they have a gift card or an FSA card or a card they see
as their bank account.”
The good news for the industry is that there always will be a place for prepaid products, whether they’re digital or inside a mobile wallet, according to PPS’s Brash. “As times change, the prepaid market will have to adapt, and I don’t expect innovation to come to a halt anytime soon,” he says. “The increase in transportation networks and the number of retailers integrating mobile apps as part of in-store checkout or going contactless—
not to mention the advances being made in the integration of the Faster Payments scheme outside of traditional banking—will create a number of major opportunities for the prepaid market.”
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