MoneyGram International Inc. is attempting to gain more business from underbanked consumers by offering them a reloadable prepaid debit card.
The Minneapolis company said last week that it has signed a deal with AccountNow Inc., a prepaid debit card marketer that already has a reloading relationship with MoneyGram. AccountNow has developed a cobranded reloadable prepaid card that MoneyGram will distribute through its agent locations starting next month.
The card is "all about improving our customers' experience with the core product" of money transfers, Tim Summers, MoneyGram's general manager of consumer products for the Americas, said in an interview last week. His company previously developed a MasterCard-branded prepaid card for agents who requested it, but that card, which was not broadly marketed, "was more of a defensive approach."
The AccountNow card, which will run on the Visa Inc. network, addresses increased consumer interest in prepaid cards — not to mention increased competition for those consumers' business, Summers said.
"There are really good players in the marketplace today, so we had to make sure we had our own solution for when we have one of the consumers come into our agent locations," he said. "Giving our customers more control and choice will absolutely give us some lift or will help us with attrition in the future. … It will be helpful for our core business."
MoneyGram will provide the cards to agents who request them, starting with about 3,000 locations next month. Summers said the cards will initially be available only at U.S. locations, though "we obviously have plans to broaden that."
The multiyear deal includes a revenue-sharing arrangement, he said, but neither he nor AccountNow would discuss its details. The card will cost $8.95 to purchase, $2.95 to reload with cash, and $3.95 to use on a monthly basis. (Direct deposit reloads will be free.)
Recipients of MoneyGram's money transfers can have an agent load the funds on to the prepaid card for a fee, but Summers said his firm is working on a one-step "integrated solution" that would let consumers receive the transfers directly on to the card, with the sender paying all of the fees.
Such an option, which may be available this year, "enhances the consumer experience and provides the agent an alternative to storing large amounts of cash," he said. It also eventually would give MoneyGram customers the option to send transfers online directly to another consumer's card.
Both MoneyGram and AccountNow said the success of their reloading relationship paved the way for the card deal. Summers called AccountNow's approach to segmenting the underbanked market, "specifically how they've approached the Hispanic market, very, very important to us."
For AccountNow, which said it has "hundreds of thousands of approved applicants each month," the deal offers an opportunity to widen the distribution of its prepaid cards. The San Ramon, Calif., company has offered its cards primarily online.
"MoneyGram is one of those organizations that we think has a great reputation in the marketplace, possibly the best for sending money transfers," said Matt Montes, AccountNow's founder. "We do believe there's a very strong crossover" appeal for underbanked consumers.