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By Will Hernandez
ORLANDO — Hoping to make prepaid cards more popular with mainstream consumers, payment companies are considering the introduction of features commonly available on standard credit and debit cards.
Prepaid cards generally are seen as a financial product aimed at the underbanked, but executives at the Prepaid Card Expo conference here last week said contactless technology, multipurpose capabilities, reward programs and other features could help card marketers develop specialized prepaid products for niche markets.
"Once you have the foundation and are executing well ... then you can start to layer on new functionalities and relate that to other parts of the business so you have a deeper relationship" with the cardholder, Brian Triplett, Visa Inc.'s global head of prepaid, told ATM&Debit News after a panel discussion.
Discover Financial Services already is trying to enhance its prepaid cards. The Riverwoods, Ill.-based card company last month introduced its Current Card, aimed at teens. Users are eligible for in-store coupons and online discounts when they use the card at participating merchants, and Discover also supplies online tools parents can use to monitor and control spending on the card.
Farhan Ahmad, Discover general manager of prepaid and director of emerging payments, said at the conference rewards programs deliver value, especially during tough economic times, but the company must continue offering the core features and functions that have made prepaid cards popular with its core, underbanked customer base.
"Consumers have basic needs, and we need those products to do basic features," Ahmad said.
Steve Streit, founder and chief executive of a Monrovia, Calif.-based prepaid card marketer, Green Dot Corp., said at the conference the basic stored-value account remains "the beauty of prepaid cards."
He said that his company's research suggests that many consumers do not want a multipurpose product, such as a card they can use to pay for public transit from one account and to make everyday purchases from another.
Green Dot's product meetings focus on identifying its customers and what they want and need, he said. "The second you forget about that, you're done," Streit said.
However, he agreed that card companies should consider adding features as prepaid cards become more common outside the underbanked market.
Anil Aggarwal, chairman and CEO of the New York-based prepaid card processor TxVia Inc., said at the conference his clients are aware that different types of consumers have different needs and are trying to develop products "that make sense and are meeting payment needs" for specific market segments.
"Ten years ago, there was no need to have a vision of what prepaid was supposed to be," he said. But this has changed as companies introduce different products with different features.
Finding the right balance of features without alienating consumers spurs a continuing debate, according to Jennifer Tescher, director of the Center for Financial Services Innovation, a nonprofit affiliate of Chicago's ShoreBank Corp. The key for payment companies is introducing prepaid functions that strengthen the cardholder relationship and make users think they are getting the same services as traditional bank customers, she said.
"You have to have features that attract the consumer [to] buy the card and then have features that will get them to continue to use the cards," Tescher said.
Visa's Triplett said the question becomes, do the extra functions and features add value for the cardholder? If they are too complex to use and "you can't educate them, well, then you've invested in something that has no value," he said. ATM
