PrepaYd Inc., a marketer of prepaid debit cards that operates under the name Bank Freedom, will soon begin offering its customers prepaid wireless phones and service to help create more customer retention around its card products.
The Newport Beach, Calif., company on Tuesday said that it opened a call center to service new and existing customers. But PrepaYd also will use the call center to cross-sell prepaid wireless phone plans this fall, Bruce Berman, its chief executive, said in an interview.
Consumers will receive a $5 discount on their monthly bill if they use the Visa-branded Bank Freedom prepaid debit card to pay for wireless phone service, Berman said. "A cellphone user's life is significantly more lengthy than that of a prepaid cardholder," Berman said. "By combining the two, we think we'll prolong the life of [the relationship with] a prepaid cardholder."
Combining prepaid phone service with a card is not a new concept, according to Ben Jackson, a senior analyst in the prepaid advisory service at Mercator Advisory Group in Maynard, Mass. Kmart, a subsidiary of Sears Holding Corp., at one time offered a closed-loop prepaid card with AT&T Inc. that consumers loaded with funds to buy long-distance minutes and goods in stores, Jackson said.
Jackson said he believes PrepaYd's foray into prepaid wireless service is logical, however. "It makes sense to target prepaid wireless customers because they understand the prepaid concept," he said. "They have an intuitive understanding of the way prepaid works."
Berman said the phones will help introduce PrepaYd's cardholders to mobile payments. "If you're a prepaid card company and a prepaid wireless provider, you're getting ahead of the game," he said. "This is a [mobile] payments move."
PrepaYd plans to start marketing the phones in September or October, Berman said. It already has a partnership with an undisclosed mobile network operator, he said. "We were able to contract with one of the largest [mobile network operators] in the country because they're using us as a test program to see if this is a good marketing tool," Berman said.
The phone offerings include those powered by Google Inc.'s Android operating system.
Berman said PrepaYd's program will succeed based on internal research the company conducted during the past few months. Based on survey results, Berman said, "We'll get a worthwhile percentage of our existing cardholders to get our prepaid phone."
PrepaYd also is developing a mobile application.
Berman said PrepaYd would not market the phones exclusively to the underbanked or unbanked consumers. "Some people that get prepaid phones don't do it because they are unbanked," he said. "They do it because it's cheaper."
