The steep entry fee for the prepaid Kardashian card — or "Kard" — sends a clear message: this is the luxury prepaid card. VIPs only.
Many users consider prepaid cards, particularly those bought in stores, to be disposable. Whereas other prepaid providers are attempting to make their cards more useful by adding features, the Kardashian Kard, endorsed by reality television's Kardashian sisters, has taken another approach: make the card too expensive to put down.
Far from being a potential barrier to adoption, the high price is a major selling point for the card, said Tim Chen, the founder of NerdWallet.com, a lead generator and card comparison website.
"I think that the up-front cost is going to increase the status of this card among other [consumers] just because they all know what it costs," Chen said.
Beyond the sticker shock of being charged six to 12 months of fees at once — driving the cost of activating the card to $59.95 or $99.95 — the $7.95 monthly rate is not far out of line with what typical prepaid cards charge. The business model behind the card is an apparent attempt to lock consumers in over time.
Prepaid cards are not known to be "sticky" products. This month, the prepaid provider Green Dot Corp. said that part of its strategy to combat that trend is to sell cards online, since the Web attracts more long-term customers than retail stores do.
The Kardashian Kard is sold online only. Its fees are an additional factor meant to help retain customers, said Jeannie Bauer, the e-banking product manager for Sunrise Community Bank, the holding company for the card's issuer, University National Bank of St. Paul, Minn.
"This is not the least expensive option in the market — we acknowledge that — but the program manager and the Kardashians felt that their target market, young professionals, would be accepting of these fees," she said in an e-mail.
A monthly payment option will eventually be available to consumers after a "promotional period" has ended, but a date has not been set for that period to end, a spokeswoman said.
"Running a prepaid program is expensive," Bauer wrote, and the card avoids "consumers choosing the card simply to carry a picture of the Kardashians and to encourage the use of the card."
Despite the thought that went into the card's pricing strategy, industry experts remain skeptical of its potential for success.
"I am baffled — this card doesn't seem to make sense at all, it appears to be targeted at teenagers, yet with ridiculous fees," said Zilvinas Bareisis, a senior analyst for Celent. "If there is such a thing as a luxury prepaid market, then it's not going to be the teens."
The card is being marketed by Mobile Resource Card of Fresno, Calif. A spokesman for Mobile Resource Card did not return a request for comment.
Sunrise Community Bank executives insisted that the card is intended for consumers 18 and older. As it stands, only adults can purchase the card.
Still, that won't stop parents from buying the cards for their kids, said Farnoosh Torabi, author of "Psych Yourself Rich" and "You're So Money." She said the celebrities' fan base is overwhelmingly young, and reaches into a teenage demographic.
"The card makers understand that the Kardashians have millions of impressionable followers. They are going to take advantage of that market. They are hoping that the consumer will pay a premium for that," she said. "So when the kid is asking for something … I have a feeling that some parents are going to give in."
There are other obstacles, industry observers say.
The Kardashians' reputation is a poor fit for a financial product, said Brian Riley, a research director for bank cards at TowerGroup
"It is kind of trivial," he said. "Can you imagine a prepaid card with Willy Nelson, with all the tax problems he's had, and he comes out with a prepaid card … I just don't look at it as a winner in the market."
But Riley conceded, "that doesn't mean they won't sell 10 million of these things — stranger things have happened. It just seems a little wasteful."
Still, the card could be a good starting point for a larger Kardashian-themed payment system, said Aaron McPherson, a research manager for payments at IDC Financial Insights in Framingham, Mass.
"I think it's a good idea," he said about up-front fees. "But I do think that it needs to have more stuff associated with it. There should be access to some special website that you can download exclusive wall papers, videos. It can't just be a payment device with a picture. It has to be an experience. It has to link you to experiences."
If the Kardashian tie-in starts and ends with the branding of the card, "this is just incomplete," McPherson said.
He acknowledged that there may be a long-term plan for the Kard that is not evident today.
"Maybe this is just the first iteration," McPherson said. Over time, "maybe we will see Kardashian rewards."