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At $4.95 a month, JPMorgan Chase's new prepaid card undercuts even its student checking account. But its fee can't be waived with direct deposit or a high minimum balance — to get the card for free, users must link it to a JPMorgan Chase checking account.
May 8 -
Some banks are starting to notice the poor customers they have long ignored. Regions Financial Corp. is one of several banks expanding its check-cashing and the other "alternative" financial services that have long been offered by Wal-Mart and other non-banks.
November 10
ORLANDO — Some banks are missing out on a large opportunity to offer prepaid cards to potential customers who don't qualify for traditional checking accounts, according to data from prepaid specialist The Bancorp (TBBK).
About 15% of the people who walk into a bank get turned down, Bancorp Senior Vice President John Barbella said during a panel discussion at the
Some banks are increasingly trying to offer such potential customers prepaid cards as a "turn-down" alternative to traditional checking accounts. On Tuesday, JPMorgan Chase (JPM) became the latest big bank to introduce a
Prepaid cards are primarily marketed to young, immigrant or low-income customers known as the "underbanked," who do not qualify for traditional bank accounts or who also use alternative types of financial services, such as check-cashers or remittance companies. But as banks have tightened credit standards and seen regulations bite into their traditional checking account revenues, more and more of them are
JPMorgan Chase and other big banks, including
"It's another deposit account," he said. "Depending on the financial institution, it may or may not make sense for them" to offer a prepaid card, but "given the momentum in the market … I suspect that more and more retail financial institutions will look at it."
But Barbella cautioned that for some banks, offering potential customers prepaid cards as a "turn-down" alternative to checking accounts may not be the most effective way of doing business.
"I'm not sure that's the best play," he said, adding that some banks would gain more from prepaid by running payroll or benefits cards on behalf of companies and governments who disperse funds on such cards.
For some banks, especially smaller companies with fewer resources, offering their own prepaid card to customers is "more time-consuming," Barbella added.
The annual card industry conference is sponsored by American Banker and its publisher, SourceMedia.
