Tuesday, March 10, 2009

Card Brand Perspectives: Roadmap for the Future of Prepaid

Yesterday we had the opportunity to sit in during the Card Brand Perspectives Workshop. Here are the speakers in the discussion.

Paul Tomasofsky, President, Two Sparrows Consulting, and Acting COO, NBPCA
Carrie Vriheas, Head of Global Category Infrastructure, Visa
Neil Dugan, VP, Global Prepaid Product, Mastercard Worldwide
Ed Boyle, VP, Business Development, NA Prepaid Cards, American Express
John Badovinac, Prepaid, Discover Network

Here are some of question discussed during the presentation.

Q: What are some of the challenges in the industry that are going to affect the growth trends?
A: One of the challenges is around education at the consumer level. We must make sure that the values of prepaid is clearly understood so that people can use it for everyday spending and how the product functions can reach them. We are starting to see a lot of higher loads going into cards because of layoffs. General purpose reloaded products. Some major brands are down 54%, electronics brand 20% in December. The closed loop segment is larger than the open loop segment. I wouldn’t say the best days are being us there is still a lot of growth in merchandising.

Q: What’s happening with Visa and MasterCard reload networks domestically?
A: MasterCard reload network has about 50,000 allocations across the US and is always looking to expand. Internationally speaking, we are planning to expand in Latin America and Europe as well. Reloading is an important aspect.
From a Visa standpoint, we are working with a variety of partners to expand in the US, and planning to expand in Australia and other locations. An important function of reload is to be able to able to load funds and use them in real-time.

Q: Concerning channels of loading, are any of you looking at alternative ways to load cards?
A: Discover is looking at what are the existing networks of reload and how well is it working. We are comfortable with payroll networks and other government partners. We are exploring other options as we speak.

Q: What are the key expenses in prepaid cards?
A: Thankfully prepaid is a lot simpler and cheaper than credit. There are transactions fees and interchange fees. On the expense side you have production, card-building, and customer service.

Q: How do you convince someone who is not tech savvy to get a prepaid card?
A: A good example is social security. Social security funds can be loaded into a prepaid card and they do not have to worry about the check getting stolen and having someone cash it somewhere.

Q: What education programs for consumers can we expect from card processors and merchants?
A: We are looking at helping people spend smarter and save for a better future. We have a spend analyzer to help manage spending. Working on the prepaid side, we will bring similar tools so that when a consumer spends at a gas station they understand the usage. We have looked at marketing and how we reach out to consumers and we are trying to make the program simpler and increasing communication and more frequent communication on a regular basis to remind people of the features of prepaid.

Q: How do we work with partners and processors to find cheaper ways to personalize prepaid cards?
A:I think we need to keep driving cheaper ways to personalize our prepaid cards. There are several types of processors for example DOD that I think we need to start moving towards.

Q: Where do you think the industry will be in 10 years?
A: I think that there is going to be more focus for convergence to perform better.

Finally, we had the opportunity to speak with John Badovinac, of Discover Networks as he tells about some highlights from the panel discussion as well as a small portion recorded of the discussion:

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