APEX Panel Offers Insights on ‘Expanding the Tent’ of Prepaid
While prepaid cards long have been positioned as transactional tools to help the underbanked make electronic purchases, the future of the sector lies in expanding the definition of prepaid to serve multiple money management needs for a variety of customers—including those who also have a traditional bank account. That so-called “expanding the tent” of prepaid was a dominant theme during a panel at the All Payments Expo in New Orleans this week, focused on providing a glimpse into the future of prepaid and identifying opportunities for growth in the sector.
Lewis Goodwin, CEO of Green Dot Bank, noted that while prepaid traditionally has been positioned as a transitional product—a stepping stone to an eventual checking account, for instance—today’s prepaid products are fully capable of serving as a long-term solution to be used in conjunction with, or in place of, more traditional financial services. “Prepaid is a full-featured product that meets the needs of many Americans,” Goodwin noted. “Millennials in particular, don’t bank the same way as their parents and grandparents. They view financial services in a way that’s different from how a traditional bank account would serve them, so prepaid can offer many things that are attractive to them, like mobile, P2P, budgeting and other use cases.”
To identify what use cases will resonate with prepaid cardholders, tracking cardholder behavior is key, according to Peter Ayson, vice president, partner acquisition and client management, American Express. “It’s important to get under the skin of what the customer is doing with the card—see what their spend and load data is, how they’re interacting with the app and Website.”
Ed Wang, vice president, U.S. prepaid products, MasterCard, echoed that sentiment, adding that cardholders often are ahead of providers themselves in coming up with new ways to use prepaid as part of a financial services bundle. “Our cardholders are using prepaid and payroll cards as money management tools. That’s what they’ve cobbled together—often in conjunction with a bank account or other financial product—to manage their finances,” Wang said. Given that consumers are looking to prepaid for financial stability, it’s important for providers to start moving the value proposition of prepaid in that direction as well, he added. “For prepaid to transition to the next generation of solutions and customers, it’s about how to develop and position products that can help consumers manage money, rather than speaking to just the ease and convenience of a transaction.”
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