An unusual prepaid MasterCard product, intended mainly for teenagers, has proven more popular with adults, according to the California marketing company that created it.
Next Estate Communications Inc. of Pasadena says it came up with the idea for the cards - called iGEN, short for Internet generation - to allow parents to control their children's spending, but surveys conducted by the company show that the products have caught on even more among adults who do not qualify for standard credit products.
In December, Rite Aid Corp. became the first retailer to offer the iGEN MasterCard. Consumers buy a blank "activation card" at a Rite Aid store for $9.95 and load between $20 and $500 on it immediately. They then call a toll-free number and receive an account number, which can be used immediately for Internet or catalogue purchases.
A plastic card, which is imprinted with the account holder's name and looks and feels like a traditional credit card, arrives in the mail within one or two weeks.
The cards are issued by Columbus Bank and Trust Co., a subsidiary of Synovus Corp. of Columbus, Ga., and processed by another Synovus unit, TSYS. They can be used at the point of sale anywhere MasterCard is accepted, but not for transactions that involve open-ended credit, such as monthly subscriptions or car rentals. The cards can be reloaded at any of about 3,600 Rite Aid stores nationwide.
At a checkout counter, the card acts like a signature-based debit card, but customers also get a four-digit password to get cash at automated teller machines. If the cardholder reports a lost or stolen card promptly, MasterCard's zero-liability coverage guarantees that the cardholder will not be held responsible for unauthorized transactions.
Just like holders of regular credit cards, iGEN cardholders get a monthly statement, and they can view their balances on a Web site, www.mymccard.com.
Next Estate says another retailer, Pantry Inc. of Sanford, N.C., is introducing iGEN cards at 1,324 of its convenience stores, and that other chain stores will begin offering them soon.
Steven W. Streit, the president and chief executive officer of Next Estate, said the three-year-old company plans on April 1 to introduce another stored-value product through Columbus Bank and Trust, the Truth MasterCard, that will work like the iGEN card but will be sold through smaller retailers.
Customers will get a printed reference number from the cash register and call a telephone number to activate the product. They will also be able to reload their cards at participating stores.
John Learish, Rite Aid's vice president of marketing, said the iGEN cards appealed to him because "no one is ever turned down," and the product gives customers "the convenience and security that comes from paying with a MasterCard."
Rite Aid also benefits from the product, he said. "Because customers must visit Rite Aid to reload their cards, the card helps generate repeat visits and new sales throughout our stores."
Bill Mathis, the senior vice president of North America member relations at MasterCard, said that iGEN "brings the convenience of a traditional payment card to a wider group of people who have never been able to take advantage of this payment method."
