As more prepaid debit card marketers target the underbanked, it is important for those programs to provide a link to mobile phone services so customers can monitor their balances, among other services, Bart Narter, an analyst at Celent, tells PaymentsSource.
Narter released a report in late August, “Reaching Underbanked Consumers Through Mobile Services,” detailing the benefits of mobile services for that consumer segment, such as account and bill-pay alerts, along with other financial messages and reminders.
“I see mobile as a tool to enhance the offering of especially the general purpose reloadable [prepaid debit] cards,” says Narter. “For people who are living paycheck to paycheck, they like keeping abreast of their balances and not only [are mobile services] very valuable to them, it is among the least expensive ways to deliver account information to the consumer.”
The report suggests that mobile phone use is “ubiquitous” in the United States, as 96% of the population uses wireless technology. “Unlike Internet access at home, mobile access is consistently high across demographic and socioeconomic groups,” Narter writes, adding that Hispanics, African-Americans and young consumers are heavy users of text-messaging and data on mobile phones.
Some prepaid card issuers already are taking heed. UniRush LLC in August announced that it is adding mobile access to its prepaid card offerings (
Mobile payments for the underbanked also are not likely to cannibalize the existing payments market because prospects are currently using cash—not payment cards—for the kinds of transactions that mobile payments will target, says Narter.
While mobile payments may help financial services providers target underbanked customers, the hype surrounding Near-Field Communication applications may be overblown, obscuring the fact that NFC still lacks a sound business case.
“Mobile payments is going to be a longer journey,” says Narter. “Picture yourself as a big card issuer ... why on earth would you want to share the revenue for any payment product? A wireless carrier is not going to let your application on their phone for free.”
The value proposition for mobile remains questionable because plastic cards continue to be an effective payment method in the United States, Narter suggests.
Despite that skepticism, Narter notes that “most experts agree that mobile payments will eventually take off, but no one knows how long it will take.”
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