The fallout from the now-defunct Kardashian Kard appears to be forcing celebrities to scrutinize potential prepaid debit card partnerships before signing a deal to endorse and promote a product.
Rapper Lil Wayne's music recording label Young Money Entertainment made sure it was offering a credible product long before it officially launched a cobranded Discover-branded reloadable prepaid debit card Nov. 10, according to an executive from the company helping to manage the program.
"That was absolutely in the forefront of everyone's mind," says Tim Clark, CEO of Accent InterMedia Inc. "This product had to have credible legs and value cardholders could actually use and feel good being a part of."
Young Money's card is adhering to the recent trend of prepaid card providers adding extensive features to create customer retention.
The card features online bill pay from Billeo Inc., direct deposit, a spend analyzer that helps cardholders budget funds, prescription drug discounts and shopping discounts in the form of cash back that are meant to offset card fees. The Young Money card's purchase price is $6.95 with a $3.95 monthly maintenance fee. An ATM withdrawal costs $2. The reload fee is $4.95.
Discover Financial Services issues the card. Fidelity National Information Services, or FIS, processes the transactions.
A portion of every card sold will benefit nonprofit organizations such as Lil Wayne's One Family Foundation.
Clark declined to reveal the card's sales since a social media marketing campaign for the product began Sept. 27, but he believes the card is doing better than expected.
"When you look at the demographic for the Young Money audience, you are hitting the ideal demographic for a prepaid card," Clark says. "I think everything that we thought going in was true-that the brand following is enormous and the need for a prepaid [card] is significant."
Whether celebrity endorsements create market success is debatable, notes Ben Jackson, senior analyst at Mercator Advisory Group.
"[Success] is going to depend on the target market, the particular endorsement and the real level of involvement from the celebrities," he says.
Celebrity-endorsed cards are common, and few, if any, have reached widespread use with their intended consumers, Jackson notes.
Young Money's card and other celebrity-endorsed products also will face scrutiny from consumers and the media in light of what happened with the Kardashian Kard, Jackson adds.
The charge for the Kardashian Kard was $59.95 for six months or $99.95 for a year, and the price included the card's $7.95 monthly fee and an initial load fee of $5. Though the card's monthly fee structure was somewhat similar to other offerings, the initial fee caused sticker shock among many watching the industry.
Despite the potential pitfalls surrounding a celebrity-endorsed card, such partnerships do bring more awareness to a market that continues to grow annually, Jackson believes.