DES MOINES, Iowa-Seven-million Hispanic U.S. households are underbanked or underserved. That's a sizeable market waiting to be tapped, according to one expert, who says one key to penetrating that market is through prepaid reloadable cards.
Miriam De Dios, VP at Coopera, said a prepaid card built specifically for Hispanics provides CUs with a tool to attract many new members and boost earnings. "A reloadable prepaid card doesn't allow for overspending," said De Dios. "These cards help underserved consumers manage their budget-conscious lifestyle. Plus, it puts the issuing financial institution in a position to nurture the financial growth of prospective members, turning underserved consumers into some of their most loyal members."
The cards also alleviate the burden, and cost, associated with having to get money orders, use a money transfer service, or go to check cashers to pay bills and manage daily financial needs. Prepaid can also help CUs cut into the $320 billion that alternative financial service providers generate annually, De Dios said. Some of this competition targeting Hispanics is coming from two of the largest Spanish TV networks, and, to a much lesser degree, Walmart, De Dios noted.
Need To Be Relevant
De Dios said CUs should make all marketing materials and support services, such as websites and call centers, bilingual, and the card must be "relevant" to Hispanic consumers. That can be accomplished through the naming and images on the card, but what is more important are the card's associated features. Hispanic cardholders want online account access, 24/7 member support services, and text alerts.
"You have to have mobile. Hispanics consistently over-index on studies regarding smart phone use or use of advanced features on a standard cell phone. Any reloadable card program targeting Hispanic cardholders must include the ability to access funds and account information remotely. Text alerts are a feature Hispanic cardholders have come to expect."
De Dios recommended that CUs take into account the extended families of prospective Hispanic cardholders, as well, and allow for a number secondary cards, which can be used internationally. But De Dios warned against waiting to long, noting the two major Spanish TV stations, Telemundo and Univision, are already aggressively in this card space.
What To Take Into Consideration
De Dios said the Spanish TV stations' prepaid cards offer consumers a great deal of choice in how the card can be structured, adding that Hispanics also receive numerous options from the small money-transfer outfits used to wire cash outside the U.S. "Hispanics have become accustomed to choice in the financial products and services they choose, and credit unions should take this into consideration when developing their prepaid card."
The biggest advantage credit unions have over non-financials, insisted De Dios, is offering more than just a prepaid card, such as savings accounts, programs to build credit or get a loan, and financial education.
The prepaid reloadable card can provide an excellent opportunity for credit unions to enter the Hispanic market. However, offering the card is not enough. De Dios said a great deal of effort must be placed on financial education. "For many Hispanics, a reloadable card may be their first foray into a non-cash environment. Teaching these cardholders how to use reloadable cards is only the first step. The ultimate goal is to turn your reloadable cardholders, many of whom will have come to you as unbanked individuals, into long-term, viable and contributing members."
Coopera offers a reloadable Visa prepaid card built specifically for the Hispanic community. The Coopera Card was developed by Coopera in partnership with its sister company and card processor The Members Group. Coopera continues to mourn the death of its co-founder, Warren Morrow, 34, who died unexpectedly just two weeks ago.
