Prepaid Card Exec Panel: Downward Pricing Pressure Demands ‘Holistic’ Strategy (March 5, 2013)
March 5, 2013
As competitive pressure drives prepaid card pricing and fees steadily downward, prepaid marketers must become savvier about managing portfolios on a holistic basis rather than as low-cost standalone products, a panel of industry executives suggested during a panel discussion on the future of prepaid cards on March 4 at the Prepaid Expo USA. “When you can expand your portfolio and products, you’re making money from all aspects of the business instead of just one product,” Frank Squilla, InComm’s senior vice president of sales, told attendees. In terms of prepaid pricing trends, “we are not in a race to the bottom, but a race to value,” he said.
Ron Hynes, MasterCard Worldwide’s group executive for global prepaid solutions, advised prepaid card marketers to “take a more holistic approach” and aim to design products around consumer preferences, rather than focusing too heavily on fees and pricing. Larger prepaid card marketers increasingly must “look at the entire business” instead of individual products to achieve overall profitability, Hynes said.
The advantages scale and volume provide in prepaid will likely drive further industry consolidation over the next year or so, Steve Streit, founder and CEO of Green Dot Corp., predicted. “You’re going to see more consolidation of companies buying each other and you’re going to see a lot of attrition,” he said. “You’ll be seeing some of the smaller [prepaid card] programs beginning to get phased out, with fewer players and larger survivors.” One of Green Dot’s chief competitors, NetSpend, recently announced it is being acquired by TSYS.
In such an environment, an established giant like American Express Co. is finding new market opportunities within prepaid, Alpesh Chokshi, American Express’ president, global payment options, told attendees. “The power of prepaid combined with mobile has allowed us to fundamentally alter our strategy. We are moving from being an exclusive [credit card] brand to an inclusive brand” through prepaid,” he said.
