Western Union Co. plans to use its prepaid cardholders' transaction data to offer discounts on funds transfers and bill payments.
The Englewood, Colo.-based funds-transfer company plans to offer prepaid rewards by the end of this year, Diane Scott, the president, executive vice president and chief marketing officer of Western Union Ventures, said in an interview earlier this week. Western Union Ventures is a unit of the company that focuses on developing new offerings for consumers.
The discounts create loyalty, which Scott expects will drive more of Western Union's money transmitter customers to use prepaid cards.
In 2011, "we moved $81 billion to different parts of the globe, and most of that ends up cash," Scott says. "The opportunity to convert a lot of that cash into stored value is our sweet spot."
There are downsides to Western Union's approach.
The primary concern, analysts say, is that some people don't want their transactions tracked. Western Union's plans may drive consumers away instead of making them more loyal, says Ben Jackson, a senior analyst at Mercator Advisory Group.
"Many prepaid card users cite privacy as a reason for using prepaid cards over other forms of payment," he says.
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