PSCU, a payments-focused credit union service organization, is working with the fintech EnaComm to support dedicated prepaid card offerings for credit unions.
The companies are responding to the
“We've invested a lot of time and effort and resources over the last handful of years around cultivating that digital experience [for our member institutions] … when we looked at prepaid, we saw an opportunity for us to enhance that [area] to really meet folks where they were,” said Cody Banks, vice president of payment and fraud solutions at PSCU, which is based in St. Petersburg, Florida.
In the second quarter of last year, 21% of consumers surveyed by Aite-Noverica Group said they preferred using a prepaid card for online purchases. Additionally, 58% of all respondents had either received, purchased or used general-purpose reloadable cards within the past 12 months.
Consumer preference for general-purpose reloadable cards and similar products rose during the pandemic as people began making more
“Things are more digitized, whether it's payments or driver's licenses, [and it] really felt like in the prepaid realm that we had an opportunity there,” Banks said.
Altra Federal Credit Union in Onalaska, Wisconsin, began using PSCU's online platform in July and added its mobile platform in September. It has worked with the CUSO for over 25 years, incorporating prepaid services into its business model for both members and employees.
“On the operations side of things, it’s very easy to manage … if we were ever to discontinue it, I don’t feel confident I would trust just telling our members to get a prepaid card at a retailer,” said Jennifer Cyert, vice president of deposit and payment strategies at the $2.2 billion-asset Altra. “We want to make sure they have a good experience and having this program allows us to do that.”
Although the prepaid offering is meant to be customizable, it's also meant to provide consistency across the channels consumers use to manage their accounts, according to Chris Dell, vice president of business development for EnaComm.
The tool "is not something that's fragmented where we've had the web portal for a decade and now we're just rolling out a mobile app," Dell said. "It's something that was built from the ground up to cooperate together and to do so in a way that could be seamless, whether it's between your computer or your phone."
The user data such a platform generates can be used for further customization or to provide the credit union with insight on customer interactions, said Tony DeSanctis, a senior director at the Scottsdale, Arizona-based advisory firm Cornerstone Advisors.
The digital access this platform provides could be a differentiator for the credit unions that deploy it, DeSanctis said.
“Historically, it's been about who's got a branch on the corner and geographically who's the most present … the digital space changes that completely,” DeSanctis said. “The ability to leverage that targeted model and follow up on it, create response models and marketing strategies around it is nowhere on most [small] financial institutions’ radar.”
Outside of the applications for current credit union members, prepaid card programs hold similar benefits for younger consumers or those without credit seeking to understand budgetary management and personal finance.
“All these products out there, they're marketing them as debit cards but behind the scenes, there is a prepaid platform and this whole ability for the parent to teach financial literacy to the youth and [have them] grow up through a card product is huge,” said Courtney Haan, strategic product manager for PSCU.
