Editor's note: I recently conducted an email exchange with Render Dahiya, president and CEO of Arroweye Solutions (Chicago, IL), which in short order became a compelling interview.
We covered a lot of ground: everything from regulation to the Kardashian Kard bungle to the need for speed in the custom card space and, of course, mobile migration from a plastics producer's point of view.
Arroweye, btw, is a marketer and on-demand producer of customized plastic gift, prepaid, debit and credit cards and, increasingly, virtual products.
I trust you'll find our digital conversation as stimulating as I did.
Ps. Please be sure to check my additional notes at the interview's conclusion for more information!
Q. How would you describe the state of the prepaid card industry?
Growing, but facing some uncertainty. The statistics in terms of growth in load and programs are amazing. Prepaid to me has some of the most creative problem-solvers in the financial services industry. They are looking at where consumers have needs and are coming out with products that satisfy those needs – that’s what’s driving so much success.
Uncertainty, though, stems from government regulation. Is financial reform going to restrict the industry? What new rules and regulations are going to impact my card program and its profitability? This uncertainty is one of the reasons I believe prepaid program managers must look for flexibility from their platforms. It’s another reason why I like digital on-demand solutions; they give the program manager flexibility.
Q. You mentioned financial regulation. More specifically, what’s your take on the regulatory environment with regard to the prepaid market?
As we all know, once an amendment is passed the fun has only just begun. The amendment only provides an outline for the new environment, but agencies and staff write and form the actual detailed rules. I think we all have to operate in a bit of a state of flux until all the rules have been written. Right now the focus is on debit, but it would be naïve to think that parts of prepaid would not eventually be examined and impacted by financial regulation.
Prepaid to me has already proven to be one of the most innovative groups in the financial services industry and, because of that, I believe once we know the new ‘rules,’ the industry will quickly adapt and focus on differentiating their product/s from those of their competitor/s.
Q. Outside of the regulatory space, what trends are you seeing specific to prepaid that our audience should monitor? And which ones are likely to be short-lived versus long-term?
It seems as though celebrities are jumping on the prepaid bandwagon while it’s hot. The ill-fated Kardashian Kard, Russell Simmons and even radio personality Tom Joyner are backing prepaid. If it works, it could be a successful tactic to sell cards. But given the negative buzz surrounding these programs, it seems as though it may have caught the most attention in all the wrong places.
Day to day, I see more and more clients push for two key things: 1. Get new card programs to market faster, and 2. Customize these programs for their clients. We have some clients in the incentive space that are running programs that may only issue 1,000-2,000 prepaid cards, but their expectation is not only to launch in less than two weeks, but to co-brand and personalize those cards.
In the past, these two tasks were almost mutually exclusive. To attempt to satisfy these goals, one would have to issue a generic card and spray the client’s logo in black on top of the card. The new technologies on the market now allow companies to accomplish both goals: to issue highly customized cards in short runs, fast and on-demand. Visa, for example, has recognized this requirement and is piloting some new programs to speed up approvals of card programs.
Q. How do prepaid card issuers gain a competitive edge? I.e., how to stand out in a crowd?
There isn’t one answer for all issuers; it is highly dependent on the market their program is focused on. In rebates and incentives, I think it goes back to a point I made earlier: have the ability to launch quicker than your competitors and brand all aspects of the program for your client, from card artwork to packaging. Possibly come up with ways to drive the consumer to use that card back at the place they earned it from through offers customized specifically to them.
If you are in the GPR space, it’s all about how to drive reload and top-of-wallet usage. I believe that comes from understanding the needs of the consumer – the user receiving the card – and then building a card program that matches their needs. You want a program that in every way makes them feel like it was tailored specifically for them. Obviously the rules and any rewards that come through that program will do this, but also the individualism must show through the artwork and branding of the delivery of the card. There are ways to drive emotional ties that increase usage and reload. This holds true for almost all consumer products, not just prepaid.
Q. As a manufacturer of plastic, I’m interested in your take on the rise of mobile. Is plastic on its way out?
I think social, mobile and plastic all have their own place in the prepaid market. I also suspect it’s premature to evaluate mobile’s true impact on plastic payment cards. Mobile payment technology, like any new innovation, takes time to develop. From security, functionality and acceptance at the POS…there are many unknowns on a broad scale. My sense is that mobile and plastic will both be key components of a company’s business strategy moving forward and that they will complement one another in a robust and realistic prepaid portfolio.
I’m biased, of course, insomuch as we specialize in the manufacturing and personalization process and the impacts of a long-term move to mobile are different for us than others. In the long term, if a subset of people move away from plastic, it only aids our value proposition since we operate in an on-demand model and we don’t have millions of cards in a vault sitting in inventory that will go unused. Our clients will not be exposed to a one-size-fits-all decision. They will have more flexibility to adapt to their consumers needs and issue unique cards to the consumers that want them.
Additional editor's note: Render Dahiya will be participating on a panel at IIR's Prepaid Expo USA taking place March 6-9 in Orlando, FL. The topic title: "Revolutions in Package Design and Card Manufacturing Practices That Help Attract Customers and Keep Costs Under Control"
The event is nearly sold out, but there's still time and space to be a part of the industry’s largest gathering for network branded prepaid and stored value decision makers and influencers!
For more information or to register, please visit www.iirusa.com/prepaid
Hope to see you there!
ABOUT RENDER DAHIYA
Render Dahiya is the former SVP of FedEx Kinko’s U.S. Operations, and later Culligan International's EVP of North American Dealers.
Dahiya joined Arroweye in November 2007, and became CEO in May of 2008. After earning his stripes in the closed-loop sphere – with a client roster that includes Macy’s, Borders and eBay – Dahiya helped lead Arroweye into the open-loop industry in 2009 by obtaining Visa Vendor approval. This certification marked Arroweye as the first company to manufacture and print the Visa logo on-demand while simultaneously personalizing a payment card.
ABOUT THE EDITOR/INTERVIEWER
Marc Dresner is an IIR USA communication lead with a background in trade journalism and marketing. He is the former executive editor of Research Business Report, a confidential newsletter for the marketing research and consumer insights industry. He may be reached at mdresner@iirusa.com
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