The Days of GPR Are Over!
September 6, 2012
It is no secret that I believe the term "general purpose reloadable" is a huge liability to the prepaid industry. This entry presents my argument. Here is my rationale for eliminating the term GPR and creating new segments and terms that I trust will better serve our industry:
1. GPR fails to identify segments that have significant operational differences. Mercator has been tracking 16 individual segments that utilize GPR for the last four years, including unemployment benefits, social security payments, travel, remittance, payroll & T&E. In these four years, this taxonomy has become insufficient, as the segment Prepaid Financial Services has evolved into a range of highly differentiated segments including teen, turn down, bill pay, tax returns, and budgeting. While Mercator would like to measure these segments individually, that’s impossible to execute when the industry fails to identify and measure the individual use cases.
2. The continued use of the term GPR leads organizations that are unknowledgeable regarding prepaid implementation details to assume that these reloadable segments are operationally very similar, if not the same. Chief among these are regulators and consumer groups, which already assume that GPR is a product that is solely serving the LMI communities. Due to this incorrect assumption, these organizations use the term GPR when they lobby for fee restrictions and other new rules designed to protect the LMI consumer. When these rules are applied too broadly, they will damage many of the alternate use cases. For example, if ATM usage is mandated and fees on ATMs eliminated for GPR, it will severely impact the ability to deliver a budget product, since ATM use does not help the consumer budget. Free ATM access would also damage Travel cards, since the fees incurred with international ATMs are even higher than domestic ATMs.
3. Clinging to the term GPR promotes sloppy, undifferentiated metrics. Instead of tracking performance by specific use cases, such as teen, turn down, PFS, budget, etc., all are lumped into a single set of GPR metrics. As a consequence, the accuracy of business plans are significantly diminished since usage variances across these use cases continues to go undiscovered. For example, it is likely that a budgeting use case drives more frequent loads over a longer period of time while generating fewer cost generating transactions. But if the budgeting use case is not tracked independently these details remain undiscovered.
4. GPR eliminates the ability to identify new use cases or fully understanding current use cases. If, as described above, individual consumer uses cases are not tracked, then new uses discovered by consumers for the cards go undiscovered, which makes it impossible to maximize a product’s profitability through marketing and education efforts.
5. All of the above slows development of new markets. Instead of evaluating consumer usage by specific use cases and then establishing products that better support that use case and creating marketing programs that draw more consumers to adopt that use case, the industry continues to sell a single GPR product. Only a few program managers have created differentiated products based on new use cases, such as bill-pay cards.
In talking to a broad range of prepaid industry participants, there appears to be 100% agreement that regulatory issues are the biggest threat to the prepaid industry.
In my opinion, the factor most likely to cause regulators to take inappropriate action on this industry is our own refusal to eliminate the term GPR. While 10 years ago the term GPR defined a new innovative product, today the reloadable capability is applied to many different prepaid use cases. Were it not for the aggressive regulatory scrutiny now lavished on our industry, we could all talk to each other about GPR. But today select outsiders have more to say about what will happen to the prepaid industry than we do. So why do we continue to cling to this outdated term? Seriously, if there is a good reason for the continued use of the term GPR please tell me what it is, because it seems clear to me that the industry is encouraging bad regulations and missing large business opportunities by continuing to use it.