Western Union Co. is making a play for share in the growing prepaid market by offering reloadable debit cards to some members of its existing rewards program.
The Englewood, Colo., remittance company said Wednesday that it would selectively offer prepaid cards to the 8 million people who already participate in its "Gold Card" loyalty program in the United States. In doing so, executives said, Western Union intends to "become a major player with prepaid in the United States."
"We're in a really good position to serve these customers beyond the money transfers. We're now giving them a payment functionality, a send functionality and a loyalty functionality all in one," Stewart A. Stockdale, an executive vice president at Western Union and its president of the Americas, said in an interview Wednesday. "We think we have a competitive advantage in servicing this customer base."
Money-transfer companies, which already do business with the underbanked consumers who use prepaid cards, are increasingly trying to exploit this window of opportunity to stake a claim in the growing prepaid market. In May, MoneyGram International Inc. signed a deal with the prepaid marketer AccountNow Inc. to start distributing a cobranded card at MoneyGram's agent sites. And in April, Western Union introduced a "MoneyWise" prepaid card that can be sent to money-transfer recipients by overnight delivery. These cards are being tested in pilot programs in St. Louis and Kansas City, Mo.
Western Union will start upgrading some of its existing Gold loyalty cards to prepaid cards "in two weeks," according to Stockdale, but he would not say how many would be upgraded. "We're testing a number of different channels to both activate and convert" consumers with "targeted offers," he said.
Western Union's Gold cardholders already can earn points toward discounts on money transfers and calling-card minutes, and Stockdale said additional rewards to accompany the cards' prepaid version are being tested.
Like the MoneyWise cards, the prepaid Gold cards run on the Visa Inc. network and are issued by MetaBank, a unit of Meta Financial Group Inc. in Storm Lake, Iowa.
The Gold cards do not carry monthly maintenance fees or purchase transaction fees, and Western Union is testing a variety of reload and up-front fees. It will even test cards without an up-front fee, Stockdale said, "and we're going to test with different price points for fees, with certain benefits."