By Steve Kietz, Managing Partner, Woodbury Advisors At the Prepaid Show last week, I got a chance to meet with three promising new prepaid card companies: PreCash, Edo Interactive and Blackhawk Network. Each brings something unique to the prepaid table.Edo was the most innovative company I met with. The product is definitely new. Marketers successfully use loyalty programs to reward you for past behavior, but Edo's lead product, Prewards, is the first to reward you in advance and stimulate behavior.
How it works is that Prewards are "coupons on a card," delivered directly to consumers' payment cards-prepaid, debit or credit. Offers can be targeted based on demographics, transaction history and other factors. Consumers who are registered in the program are alerted via email, text alerts and web so Edo messaging is cheap, targeted and timely. Redemption occurs automatically when the consumer swipes the enrolled payment card at the point of sale, and an immediate email or text alert confirms the redemption.
Alex Gershman, vice president of business development at Edo, let me try a card. He gave me a general purpose reloadable (GPR) card with two balances on it. A $10 balance good anywhere I could use Mastercard, and $5 only good at the Starbucks in the Rio Hotel. This ensures that marketers can reward very specific behaviors and it is likely the customer will be more engaged.
Edo offers a targeting system to support the product, but I found two more features very exciting: instant market research and Edo Mobile.
Having spent a lot of time in the mobile industry, I appreciate any business process that harnesses the power of that medium.
For instant market research, Edo will perform a two-way SMS dialogue with the customer following the transaction: "Did it work?" "Were you satisfied?" " Do you want more coupons?" For Edo mobile, Alex says they offer mobile management tools to provide real-time, geo-located offers on the go. This is great for consumers and merchants. These are the first merchant funded offers that really make sense to me.
PreCash is interesting in that it is a payment services provider and a direct to consumer global prepaid reloadable card provider.
PreCash has been around since 1998 and got into the GPR business in 2005. They started marketing through retail, but have since moved to the internet and are testing DRTV and direct mail.
PreCash launched the first Platinum Visa GPR. This is interesting to me, as I remember long conversations with both Visa and MasterCard eight years ago about what could be called "Platinum." We have come a long way. This card has innovative pricing. If a customer spends $1,000 per month there are no fees. However, the spend threshold sounds high.
PreCash also offers two other products for lower spenders. Company executives acknowledge the growth of credit products like myiadvance.com; these are short term, high fee loans that are linked to GPR cards. PreCash will probably start offering a loan feature later this year.
On the last day of the tradeshow I had a good conversation with Teri Llach of Blackhawk Network. I was impressed with Blackhawk's product set. It ranged from old fashioned gift cards to open and closed loop cards and even their own direct to consumer brand Only1, sold at supermarkets. A great innovation from Blackhawk Network is the GiftCardMall.com, an online shop for gift cards, offering consumers access to popular brands.