Walmart's (WMT) Bluebird account — which the retailer is launching with credit card giant American Express (AXP) — and JPMorgan Chase's (JPM) Liquid prepaid card are both potential disruptors that threaten traditional prepaid card companies' profits.
But Dan Henry, the chief executive of card marketer NetSpend Holdings, isn't reacting to either like you might expect.
"My first reaction is: Fantastic," he says. "They are going to start spending tens of millions a day educating everyone in America about a prepaid card."
Henry was a keynote speaker Wednesday at the 20th Annual ATM, Debit & Prepaid Forum.
And he quickly derided the Bluebird account, a nearly fee-less prepaid alternative that looks similar to a checking account. The accounts aren't FDIC-insured, he says, so Walmart and American Express cannot load Social Security checks or other government funds on to those cards.
"In my opinion, they just alienated 40, 50 percent of that total available market," he says. "If you work for the Department of Defense, you can't get your paycheck on that card."
But consumer education is a big piece of bringing customers to prepaid cards.
It's not a stretch of the imagination that customers that first learn of prepaid after using JPMorgan's Liquid card could eventually become NetSpend customers.
"I don't think [Henry] is blowing smoke," says Larry Berlin, a vice president and research analyst for First Analysis. "Part of [gaining new customers] is building comfort, adoption and awareness."
For sure, the range of consumers that a prepaid card can serve is vast.
Henry says that some banked customers are even using NetSpend's prepaid cards as cost control tools.
"I'd like to take 20 of them and send them to D.C. to balance a budget," says Henry. "They don't have enough extra cash to buy a full tank of gas, but they're still out there raising kids."
Henry added that NetSpend's program management and processing business also provides the company with an advantage.
For instance, PayPal uses its network to fund a prepaid MasterCard managed by NetSpend and issued by the Bancorp Bank, a unit of Bancorp (TBBK).
"From beginning to end we handle packaging, design and messaging," says Henry. "Our mission as a company is to provide the security and freedom of a self banking product that a consumer can't get otherwise, and we are always looking for partners."
Henry also says that his company's processing capabilities also enable it to catch fraud much faster than if NetSpend purchased those services from a third party.
In the end, "the market is still so big, it's not a zero sum game," he says. "If there is room for thousands and thousands of banks, there is room for more than one company in prepaid."