Hewlett-Packard Co. wants it known that its business interests extend beyond personal computers and printers. They also touch the payments industry in a significant way.
The Palo Alto, Calif.-based information-technology company on March 21 launched HP Prepaid Card Services, which is an extension of its HP Cards and Payments Services portfolio. Both divisions focus on card processing and assist banks with launching card programs.
Hewlett-Packard is entering the prepaid sector at a time when consumers are rapidly adopting the payment form and financial institutions are seeking ways to capitalize on the market’s growth, Robt Sadeckas, Hewlett-Packard director of global card strategy, tells PaymentsSource.
“We saw significant opportunities happening in the prepaid sector,” Sadeckas says.
One opportunity includes the ongoing issue of potential reduced debit card interchange rates, Sadeckas says.
Reloadable prepaid cards are a possible alternative to traditional debit cards for banks because they are exempt from the so-called Durbin amendment in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The Federal Reserve Board has proposed to cut debit interchange rates to no more than 12 cents per transaction from an average of 44 cents.
“What was justifiable [to charge for interchange] is a lot harder to justify at the moment, and regulators are intervening there,” Sadeckas says.
Hewlett-Packard believes stored-value and prepaid products provide an opportunity for the company to “package together value” that would assist financial institutions in recouping revenue from lost debit interchange, Sadeckas adds.
While U.S. banks wait for a final interchange ruling, Hewlett-Packard is turning its attention to the international market.
Dee McGrath, Hewlett-Packard director of secured and unsecured lending, told Computerworld an Australian financial institution has signed on to use the company’s prepaid processing services. Sadeckas confirmed an international partner but declined to reveal the bank.
An international focus might be more beneficial to Hewlett-Packard because the U.S. prepaid card processing market already has a number of large, established players, such as First Data Corp. and Total Systems Services Inc., notes Madeline Aufseeser, a senior analyst with Aite Group LLC.
“When you look at the spectrum of who the providers are across the international space, there is not one size fits all,” Aufseeser tells PaymentsSource. “Nobody truly dominates all of the markets and has a comprehensive offering.”
In a sign the company is ready to play in the international space, Hewlett-Packard says the prepaid division supports the latest EMV chip-and-PIN requirements.
Hewlett-Packard’s prepaid processing services include inventory management, integration of prepaid into an existing Hewlett-Packard-managed credit and debit card portfolio, and a website that enables cardholders to track spending.
The company processes transactions for some 68 million credit and debit cards worldwide. One of its most notable portfolios is the General Motors credit card, which HSBC Card Services Inc. issues.
Hewlett-Packard also is keeping tabs on the emerging Near Field Communication payments sector. McGrath told Computerworld that Hewlett-Packard is monitoring NFC-enabled mobile-payments trials in Australia, Japan and other regions.
Sadeckas views mobile payments as a way for Hewlett-Packard to create some differentiation in the prepaid market. “Having a stored-valued capability on the phone is attractive,” he says.
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