NetSpend Corp.’s recent decision to expand its prepaid debit card distribution partnership with the Blackhawk Network illustrates how prepaid card marketers will form stronger alliances within the industry to drive more card sales, notes one analyst.
Visa-branded prepaid cards from NetSpend will be available at more than 3,000 retail locations and some 1,425 Safeway Inc. supermarkets starting in November, Pleasanton, Calif.-based Blackhawk announced Sept. 20.
“We are always looking at channels that will help us educate the 60 million underbanked consumers on better alternatives for managing their finances,” Chuck Harris, NetSpend president, noted to PaymentsSource in an email. “Grocery stores provide another forum for our mission to help educate and raise awareness. We are focused on delivering our product where our customers live and work.”
The move helps NetSpend make its cards more readily available to consumers, thus achieving more scale in the market compared with other providers, notes Madeline Aufseeser, an Aite Group senior analyst.
“Scale is becoming a bigger factor for profitability in all the prepaid niche segments due to increased competition and regulatory pressures that have had a downward impact on fees,” Aufseeser tells PaymentsSource.
Aufseeser does not believe the agreement will move market share from Green Dot Corp. to NetSpend, but “it does ratchet up the competition,” she says.
Harris views the moves as a way to help retailers attract more foot traffic within their respective businesses. “Our ability to generate incremental traffic to the retail store, via issuing or reloading of our card, is increasingly more important to the retailers,” he wrote.
Indeed, NetSpend cardholders already can reload their cards after purchasing Blackhawk’s REloadit pack at any retail location within Blackhawk's REloadit Network. Consumers can reload from $20 to $500 using the pack. Each reload costs $3.95.
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