Recently, I had the opportunity to be on aprepaid marketing panel at SourceMedia’s ATM, Debit & Prepaidshow in Phoenix, Ariz. One of the questions put to the panel was”Are you seeing people use prepaid differently than two yearsago?”
To provide a little context for the answer, the panel was moderatedby Phil Valvardi, the head of prepaid processing at Fiserv, and myfellow panelists were Sarah Hamel, first vice president in cardservices at MB Financial Bank in Chicago, and Rob Levy, manager ofinsights and analytics from the Center for Financial Servicesinnovation. MB Financial recently has launched a prepaid card thatit is marketing in its branches both to traditional customers andthose outside of the banking mainstream. CFSI has been doingresearch and investing on financial products to help low-incomepeople since 2002.
Sarah and Rob both answered yes, they are seeing prepaid used innew ways compared with two years ago. They both noted the growth inthe variety of cards, the new use cases that cards are marketedfor, the development of mobile apps, and better disclosure, whichmakes cardholders more confident in using their cards.
While all of these developments have opened new avenues for prepaidcards, that is not the whole story. In many ways, people are usingprepaid cards in the same ways that they always have, but they areusing new cards to do it. Mercator Advisory Group’s CustomerMonitorSurvey Series has found, over the course of multiple surveys,between 15 and 20 percent of the population use some form ofprepaid card for budgeting. This includes both open-loop andclosed-loop cards.
Additionally, Mercator has heard from program managers and otherindustry participants that people have bought open-loop gift cardsfor things like making online bill payments. This led to thedevelopment of specialized cards for that purpose. So, consumersare finding new uses for prepaid cards all the time. ProgramManagers and others in the prepaid industry should pay attention towhere their cards are being used and for what. The data may providea new product development or marketing opportunity.