Suretap's Prepaid Push Focuses on the Banked

Mobile wallet providers are trying lots of strategies to widen the audience for mobile payments, including increasing transaction size and, in suretap's case, adding support for prepaid cards to attract younger consumers.

In a mobile wallet market that places more emphasis on credit and debit cards, prepaid cards have relegated to niche uses such as bridge accounts for new mobile wallet users, a lure for the underbanked, or to drive traffic to mobile carriers' physical stores. Suretap's focus is to attract more banked consumers who do not have or do not want to use a credit card.

"Prepaid is a low barrier to entry kind of product," said Jeppe Dorff, president of suretap. "If you require a credit card, then the user has to get a credit card, which means you have to go through getting a credit card, you have to manage a balance; the whole process is quite tedious."

The nature of prepaid cards melds "plays really nicely into the consumer behavior of the younger audience that's around today," Dorff said. Millennials are used to instant access to Internet-based services, and have patience for the complexities of many financial products.

Suretap's prepaid MasterCard with a fee structure that's competitive with debit account fee rates, about $2 per month, and has a six-month promotional period at launch during which it will waive the fee. Prior to introducing the prepaid card, suretap signed up 180,000 Canadians for its mobile wallet.

The addition of a prepaid card account can also mitigate the threat of data breach exposure or other types of card fraud, because the prepaid balance is typically much smaller than the spending limit of a credit card or the full bank balance tied to a debit card, Dorff said. Suretap also uses tokenization to protect transaction and account data.

However, the security of mobile wallets has progressed to the point where differentiation based on safety is a more challenging sell, according to Al Pascual, director of fraud and security for Javelin Strategy & Research.

"In effect, mobile wallet solutions that rely on tokenization are offering similar protections in that they are limiting the utility of a compromised account or wallet," Pascual said. "In fact, competing solutions may even be superior. The tokenization scheme from the card brands that forms the backbone of the big U.S. mobile wallet solutions is flexible enough to include additional data elements that merchants can leverage to make more informed decisions when managing fraud across channels."

Suretap was founded as a Rogers Communications-led mobile payments initiative in 2013, with a formal launch in 2014. It has since secured support from Telus, Bell Canada and some smaller regional telco brands to cover about 95% of Canada's mobile phone market.

In recent months, facing the prospect of Apple Pay coming to Canada, suretap has accelerated its other growth efforts. It added more retailers and marketing partners, including Cineplex, Forever 21 and Groupon.

Suretap's app is available on Android, Blackberry and Microsoft smartphones. Consumers store their card details on a SIM card and use the devices' Near Field Communication capabilities to initiate contactless payments.