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The Marriage of Mobile and Prepaid

Prepaid products and mobile banking apps both aim to give customers ease-of-use with practical functionality, and combining the two can offer a number of ways for banks to deepen their customer relationships.

Prepaid cards have evolved over recent years to provide many of the capabilities of full checking accounts, and prepaid cards have grown considerably in adoption as a result. Some prepaid offerings -- such as BlueBird and Chase Liquid -- offer mobile capabilities that experts say fit the desire among prepaid customers for simplicity and functionality and can further drive prepaid adoption.

“Prepaid is the fastest growing payment category… One of the things that are driving this is making the [prepaid] accounts interactive with mobile alerts and PFM capabilities. That will continue to grow,” says Brian Triplett, Visa’s head of North American prepaid products.

There has been a great deal of innovation in mobile platforms to support prepaid products beyond basic capabilities such as checking balances, Triplett notes. Some providers are beginning to introduce PFM tools and mobile check deposit for prepaid. “The functionality and access, that’s what customers are looking for,” Triplett says.

[See Related: How Banks Can Win the Battle for Prepaid]

Prepaid is often associated with the underbanked, he points out, but Visa is seeing more customers in the mass-banked segment (incomes between $50,000-$75,000) adopting prepaid. These customers view prepaid as a simple budgeting tool that lets them put some cash aside for day-to-day purposes.

These customers are also used to using the mobile capabilities associated with their mobile banking apps, and have come to expect them from their financial services products. This opens up the opportunity for banks to market prepaid cards as a budgeting tool to many of their more active banking customers with the added bonus of many of the mobile capabilities they already have with their checking accounts.

“Prepaid has a connotation of low-income. We need to get rid of that. It’s really simply a great way to hold funds,” Triplett explains. And with mobile alerts, PFM and check deposit, “it gives the customer the self-driven independent banking activity that helps drive prepaid. Prepaid customers don’t need too much support.”

For those banks who may not be interested in developing a full prepaid card product there are still ways to integrate prepaid into their mobile experiences. One example is offering electronic retail gift cards for purchase inside of the bank’s mobile app, says Carl Tsukahara, chief marketing officer for Monitise, which recently partnered with the Blackhawk Network to provide just such a service in its mobile offerings for banks.

“You’ll see gift card stands in branches sometimes adjacent to content on banking products. We’re facilitating for banks to sell these gift cards inside the Monitise app,” Tsukahara remarks.

Gift card sales are increasing, Tsukahara reports, and a recent survey by the Retail Gift Card Association found that 91% of customers are reporting that they plan to give one to three retail gift cards as gifts in the next three months.

For smaller banks using their mobile apps to offer gift cards can be a way to tap into this market, Tsukahara says. “Talking to some of our customer they are afraid of doing this sort of thing. They want to stick to their core products like loans and checking,” he notes. “But for regional and community banks they have to ask, ‘What can we do to be interesting?’ This can be a great differentiator for them.”

Jonathan Camhi has been an associate editor with Bank Systems & Technology since 2012. He previously worked as a freelance journalist in New York City covering politics, health and immigration, and has a master's degree from the City University of New York's Graduate School ... View Full Bio

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