Reaching New Markets with Prepaid Cards

by Ben Jackson 0

When the prepaid industry thinks aboutreaching new markets with prepaid cards, the most often consideredmarket is low and moderate income people who may or may not have abank account or credit card. Mercator has often argued that prepaidprogram managers and issuers need to think about the market morebroadly and consider how their cards meet the needs of other marketsegments.

The online gaming business has figured this out quite well. Manyof the customers they want to reach are kids who are too young tohave credit or debit cards. By selling cards for cash at retail(and to parents both at retail and over the Internet) thesebusinesses can give kids a way to transact online without the riskof friendly fraud or charge backs because parents say they neverauthorized the card to be used on games.

At the InComm Partner Alliance this past week, companies likeNexon, Zynga, and Nickelodeon spoke about how kids use their cardsto play games and parents use the cards to teach their childrenabout budgeting. They also noted that grown-ups use the cards tobudget money for the games and not have large online game chargesend up on their credit card bills.

Gaming is one example which shows how it pays to reconsider whatkind of markets could exist for a prepaid card that are notimmediately obvious. Program managers should consider thecapabilities of their cards and see whether or not there areuntapped markets which exist outside of the normal line ofthinking. Offering consumers a new method of payment may lead toincreased adoption of prepaid and increased use of a customer’sproduct.