Hoping to differentiate its product from others in the marketplace, Whitebox Partners LLC has developed a reloadable prepaid debit card with a rewards program usually associated with credit and debit cards.
Whitebox views such general-purpose cards as mainstream financial products, and it strived to develop a product with similar attributes, according to Doug Bobenhouse, president of Whitebox, the new prepaid card division of Total Card Inc. Total Card is a credit card processor.
“From a strategy standpoint, we wanted to see what kind of ground was still available, rather than just entering the market with something similar to what was already out there,” Bobenhouse tells PaymentsSource. “We believe this is a program that exceeds consumers’ expectations if you compare it with a traditional demand deposit account.”
Consumers who use the Visa-branded Jump Card will earn one point for every $1 they spend on a signature-based transaction. Cardholders receive 2,500 points if they tie the card account to direct deposit and earn the points after their third deposit. The also earn an additional 750 points for any deposit worth $750 or more.
Points are redeemable for retailer gift cards, cash back and airfare on select airlines. Consumers also may redeem points for products such as household items from a merchandise catalog. Whitebox is working with a rewards manager but declined to reveal the company’s name.
The card also features money-management tools users can access online. For example, cardholders can track transactions and set up monthly budgets.
Bobenhouse does have experience with developing prepaid reward programs. Before joining Whitebox last year, he was behind the development of a prepaid rewards program designed specifically for video gamers for Prepaid Solutions USA.
The Jump Card is available online, but Whitebox has yet to start a marketing blitz. The company will start some e-mail marketing next week and use other methods over in the next two weeks, according to Bobenhouse.
Whitebox is treating the Jump Card as its flagship product and will develop other general-purpose cards based on this initial model.
Arroweye Solutions, a Chicago-based card manufacturer and marketer, is working with Whitebox on the product. Arroweye has the ability to print fully customizable cards and carriers on demand. The partnership “drastically reduces the length of our supply chain and eliminates our inventory risk,” Bobenhouse says.
Though the Jump Card is available only in one color, Whitebox eventually will enable cardholders to customize their cards with other colors, designs, pictures and user-created images, Bobenhouse says.
The Bancorp Bank issues the card, and i2c Inc. processes the transactions.
Users pay an $8 purchase fee for the card and an $8 account-maintenance fee. Bobenhouse admits the fees are a little high, but “we think we have a significantly stronger value proposition with the rewards program and money-management tool.”
One free ATM withdrawal is included with each direct deposit, but a $1.50 fee applies for additional withdrawals. ATM transactions and PIN-debit purchases process over the Interlink and Star electronic funds transfer networks.
Whitebox will need to identify what segment of consumers it is trying to capture with the Jump Card, William H. McCracken, CEO of Synergistics Research Corp., an Atlanta- based research marketing firm. “The challenge with a rewards program for prepaid cards is understanding who your customer base is,” he says.
Reloadable prepaid cards traditionally are marketed to unbanked and underbanked consumers, McCracken argues. “The question is how receptive is this segment to rewards if it results in slightly higher [monthly maintenance] fees,” he says.
If Whitebox is targeting more-affluent consumers, then “what is the change in consumer perception that is going to make everyday use of a stored-value card the preferred product over the current credit and debit products they are using?” McCracken asks.
Consumers ages 18 to 21 might benefit from such as card because of the Credit Card Accountability, Responsibility, and Disclosure Act, McCracken contends. “Right now, card providers are thinking what to do with this group,” he says.
Under the law, which takes effect later this month, credit card issuers will be banned from issuing cards to anyone younger than 21 unless they have adult co-signers on the accounts or can show proof they have enough income to repay the card debt.
“Maybe this card can be an alternative for the college-age crowd,” McCracken says.
