GPR Prepaid User Experience: Targeting, Distribution, Features and Functionality, and Pricing
Prepaid is one of the fastest growing and most dynamic sectors of the payments industry. Over the last year several new entrants have launched general purpose reloadable (“GPR”) prepaid programs, albeit with differing approaches to the market. Notably some issuers have focused on GPR as a bank account alternative while others have positioned the product as a companion account to an existing DDA.
First Annapolis Consulting recently opened a number of these products to compare and contrast positioning, distribution, features and functionality, and card pricing.
Positioning / Targeting
Our research suggests that the majority of cards examined are primarily positioned to attract underserved consumers looking for a checking account alternative. Many promote a value proposition that includes no overdraft fees and money management features, along with convenience, simplicity, and security. Additionally, several issuers branded their products to highlight these attributes, most notably U.S. Bank’s “Convenient Cash”, BBVA Compass’ “SafeSpend”, and PNC’s “SmartAccess”. Most providers do not position their products explicitly as a DDA companion product (e.g., allowance card), with the exception of Navy Federal’s Visa Buxx card targeted at the teen market.
Traditionally most visible at retail and check-cashing locations, GPR prepaid card distribution is becoming more common in the online and branch channels as retail banks enter the market. Chase and PNC exclusively originate prepaid accounts in-branch, suggesting a DDA turndown product strategy. Alternatively, BBVA Compass, Capital One, and Navy Federal focus on the online channel, while BB&T and U.S. Bank allow prepaid cards to be opened both in-branch and online.
The PayPal and Walmart cards are both available in retail stores and online. PayPal also partners with NetSpend, whose extensive distribution network includes ubiquitous retailers such as 7/11 and Family Dollar. American Express is the only provider that enables account origination via a mobile phone application. This approach suggests a different intended target market.
The majority of GPR cards provide consumers with the ability to fund the card through direct deposit, via a linked DDA, and through retail reload networks such as Visa’s ReadyLink or Green Dot’s MoneyPak. Less common reload options included branch loads and credit/debit card based loads for retail bank issuers and cash loads at the POS for non-bank programs. Reloads at deposit-enabled ATM’s and through mobile remote deposit capture (mRDC) are still relatively uncommon. The table below highlights the options available for the programs reviewed.
Standard functionality across products includes POS (signature and PIN) purchases and ATM withdrawals, with ATM access universally offered free through the bank issuers’ ATM network or through participation in a surcharge free network. A majority of cards also offer online bill pay through integrated functionality or through a 3rd party vendor site. Other value-add functionality includes Person-to-Person capabilities (Bluebird, Serve), Facebook integration (Serve) and an optional linked high yield savings accounts (PayPal). Several of these features (e.g., online bill pay and P2P) are commonly associated with traditional checking accounts, illustrating that issuers are designing products to emulate fully functional DDAs.
Our review of the available products suggests that online and mobile account management capabilities are rapidly evolving. Programs such as AMEX, Chase, Green Dot, and NetSpend appear to provide a high level of integration into available servicing channels (ATM, online banking, and mobile application). As an example, the Liquid card is integrated into Chase’s online and mobile applications providing existing customers the ability to view prepaid card details and transfer funds without setting up a new user ID and password.
Card pricing has become less of a differentiating feature of late as cardholder fees have significantly declined over the past few years. However, the recent introduction of the AMEX/Walmart Bluebird card has garnered significant attention for its lack of a monthly maintenance fee, free online bill pay, free P2P, and includes several free options to fund the card. Most other programs reviewed employ similar fee structures, albeit with variations in the fee levels charged. Bank programs commonly offer the card free and charge monthly service fees, out of network ATM fees, certain reload fees, and ancillary fees such as card replacement, paper statement, customer service calls, etc. The primary difference among non-bank providers is the inclusion of a fee for in-store purchase.
Figure 2: Marketed Reload Options
Source: First Annapolis Consulting review of issuer websites and program T&C’s.
1 Mobile remote deposit capture.
2 Cash reloads via Walmart MoneyCenter Express Kiosk.
While the underlying functionality of the GPR prepaid cards reviewed is similar, a few aspects of program design differentiate select products. ATM loads and remote deposit capture are two such features that are infrequently offered now, but could emerge as a common feature in the future. Additionally, close integration into servicing channels appears to reinforce the GPR value proposition as a fully functional financial product. Moving forward, we expect that GPR issuers will refine product approaches to differentiate their products as the market becomes more competitive. Such actions will help accelerate product adoption among consumers and promote desired cardholder behavior for issuers.
For more information, please contact Andrew Gordon, Consultant specializing in Deposit Access, firstname.lastname@example.org
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