GPR: ‘Just Scratching the Surface’ (March 7, 2013)
March 7, 2013
During a Tuesday session entitled GPR: A Destination or Journey?, panelists at Prepaid Expo USA in Orlando, Fla., discussed whether GPR cards should be a stepping stone to a bank account and other products or if they are sufficient financial tools in their own right. The consensus seemed to be that moving everyone to bank accounts is not the answer, but there may be products, such as savings, credit, retirement and insurance, that consumers may need down the road.
“Banks are designed to serve people with money—that’s the truth,” said Dan Henry, CEO of NetSpend. “The traditional bank business model doesn’t serve lower income people.” As an industry, Henry said prepaid has only scratched the surface in terms of penetrating the unbanked market, estimating that out of 68 million consumers, the industry serves less than 10 percent.
These consumers also are the target of banks, who have increasingly added GPR cards to their portfolios. Consumer prepaid is a high priority at more than 50 percent of U.S. retail banks, noted Brett Adams, U.S. lead for prepaid products at MasterCard, who shared results of a MasterCard-commissioned study from 2012. “This is not about interchange,” Adams said. “Banks are seeing a real consumer demand for controlling spend and for online security—things that are important to banked and unbanked consumers.”
He also shared some statistics about consumer usage of GPR cards purchased at retail, which included a high prevalence of one-time or limited use. Fifty-three percent of the consumers surveyed had used a reloadable card for less than a month, while another 20 percent only used it for one to three months. “The challenge of the industry is to get under the hood and find ways to [achieve] more long-lasting engagement.” When asked about feature/functionality that might be added to GPR cards, Adams pointed to loyalty and rewards.
