OnBudget seeks to build customer retention for prepaid cards by incorporating personal financial management tools that digitize a budgeting system popular among consumers.
Citing studies that indicate consumers with bank accounts are a growing segment for prepaid card use, OnBudget CEO Jim Collas says, "The number one reason banked consumers use prepaid cards is to help them budget and control their spending."
After a new prepaid card is activated and loaded with funds for the first time, the OnBudget PFM app provides preconfigured personal budgets by tracking consumers' spending during the first month of use, Collas said during the Payments Innovation Day session of PaymentsSource's ATM, Debit and Prepaid Forum, ongoing this week in Las Vegas.
"We're not launching another prepaid product; we're launching a new product segment, the monthly budgeting card," he added.
The budgets break down expenditures by different spend segments in a way that mirrors envelope-based budgeting plans, but provides additional digital functions like real-time alerts when users reach certain thresholds.
"Getting real-time, accurate information for where you're spending is empowering," said Collas, a former chief technology officer at Gateway Computers.
While the app helps consumers better control how much they spend, it's designed to serve as the primary card that consumers use for day-to-day expenses. Citing data showing the average consumer spends $1,658 on everyday expenses each month, Collas said that prepaid cards that incorporate OnBudget's PFM technology can generate $22 per month in interchange fees.
The technology is currently offered as an OnBudget-branded product through online direct-response marketing channels, and the company is working on partnerships to private-label versions to banks.
The technology includes capabilities that help spouses manage daily expenses between linked prepaid accounts, and it can show monthly overviews of spending and provide projections of how current spending levels will tally up for the year.
OnBudget's preconfigured budgets provide a basic set of functions that suffice for most consumers, Collas said. In this way, OnBudget is a simplified version of other PFM products like Intuit's Mint. If Mint is a spreadsheet, OnBudget is a basic calculator, he said.
"Mint.com is good for a certain group of people, but some people don't want to use something that extensive," Collas said. "We are the calculator version for people who just want to manage their daily spending in a single place."
