Now that the Credit Card Accountability, Responsibility and Disclosure Act makes it more difficult for consumers younger than 21 to secure a credit card, players in the prepaid card industry see an opportunity to market their products more heavily to that demographic.
The marketplace already features general-purpose reloadable cards such as MySplash that target teenagers, but one prepaid provider is using music and social-media marketing to attract college-age students to its products.
NFinanSe Inc. and Inspire Entertainment recently launched an online music site,
“It’s really an effort to brand our name with this demographic,” Jerry Welch, chairman and CEO of nFinanSe, tells PaymentsSource.
The approach is no different from how a soft drink company sponsors a music concert tour, Welch contends. NFinanSe will combine that type of event marketing with social networking aspects to promote the online music site, he says.
“We’re going to touch a lot more people [through this approach] than we would if we sponsored a concert tour,” Welch says.
Welch realizes there is no guarantee consumers who download music from the site will ultimately purchase nFinanSe products, but the potential to make that connection is too large to ignore. “If you get them using your product, you are going to create some long-term cardholders, and those folks will hopefully tell their friends [about the products],” he says.
NFinanSe’s online music site might represent a new way by which prepaid card providers can market to college-age consumers. “You’re going to see some creative approaches from a product standpoint and also from a marketing standpoint to try and reconnect with the college-age crowd,” William H. McCracken, CEO of Synergistics Research Corp., an Atlanta-based research and marketing firm, tells PaymentSource.
Attendees at this week’s Prepaid Card Expo at the Rio All-Suite Hotel & Casino in Las Vegas shared McCracken’s view.
“This industry is going to see more products that are going to fit the needs of [college-age] demographic,” Teri Llach, group vice president of prepaid distributor Blackhawk Network, told PaymentsSource at the event. “There needs to be variety [such as online bill pay]. Not one card is going to fit the needs of everyone.”
Kenneth Goins, CEO of Prepaid Solutions Inc., said the culture of fiscal responsibility is changing from “buy now, pay later to pay before and buy now.” The challenge for prepaid companies is to create a “really good, ethical product, which you can give consumers and fulfills their need for financial services that has largely been neglected by the larger commercial banks,” Goins believes.
Marketing prepaid cards for consumers ages 18 to 21 is a “good and safe way to build some fiscal responsibility with a payment card and use a card to conduct daily purchases,” Goins said.
Prepaid card providers also will need to find new ways to market to the parents of college teenagers, Welch said. “At the [point of sale], you have to find a way to attract those consumers” because they might be the ones buying and loading the card for their children, he added.
Educating parents about prepaid cards and pricing also will be key, Llach said. “We have to make sure these parents know the products don’t have surprise charges,” Llach said. The industry will educate parents, as will their children, she added.
