The Mobile Economy Finds a Niche for Prepaid

As Uber-like business models perpetuate, bringing more contractors into a world where their job functions are handled primarily through a mobile app, there are still some pain points for which plastic is well suited.

"If you are paid on the spot right now, that usually means you are paid by a mobile app and not cash. But those funds should still be available to you like cash," said Houston Frost, senior vice president of corporate development for Payment Data Systems.

Payment Data Systems, through its subsidiary FiCentive, has introduced the Stream Prepaid MasterCard, a reloadable card that will be marketed through the company's clients to their customers, contractors and employees.

The product was designed to meet the expectations of an Internet-fueled economy, particularly in the speed of adding funds to the account.

"The real difference here is on the back end of the prepaid card," Frost said. "We own the prepaid processor behind the card, which allows us to move money faster."

The funds are available in seconds, as opposed to a day later via traditional ACH transfers, Frost said. New York-based Metropolitan Bank issues the Stream cards, which can be white-labeled or cobranded.

The Stream Card account can be managed online or on a mobile app. The fee structure would depend on the nature of the partnership with the client, which Payment Data Systems envisions as a company that employs contractors that work in the field or remotely and accept payments on the spot for their work.

"One of the more exciting opportunities is the 'sharing economy,'" Frost said. "Imagine you are a contract driver for a ride-sharing service. You can accept a payment and immediately have that money loaded onto your card."

Payment Data Systems uses plumbers and construction work as use cases, but the "Uber model" is clear in Frost's references. The ride-sharing service has attracted attention from financial institutions, with companies such as Capital One and American Express hitching a ride on Uber's brand recognition through marketing partnerships.

Payment Data Systems is also counting on benefiting from the frustration with the slow pace of the U.S. faster payments initiative. Companies such as Acculynk and initiatives such as the bank-owned clearXchange transfer network have similarly proposed that their technology could be an enabler of faster payments.

Prepaid cards have long been used to pay employees via payroll cards, a model that, like Uber, has courted controversy in the past due to the fees attached. Prepaid stands to benefit as more companies adopt a compensation model based on workload rather than a set salary, according to Zil Bareisis, a senior analyst at Celent.

"Prepaid cards are tailor-made for disbursements, such as incentives, occasional payouts to freelancers, etc.," Bareisis said. "As the sharing economy continues to grow, I can imaging the demand for fast payments into a card will also grow."