T-Mobile Launches Innovative Prepaid Product
T-Mobile, one of the country’s largest mobile network operators (MNOs), launched a new general purpose reloadable (GPR) prepaid debit card in January through partnerships with Blackhawk Network and Visa. The product is positioned to disrupt the market given its attractive price point and features as outlined in Figure 1. T-Mobile has over 15 million branded prepaid mobile service customers,1 logical targets for the product, and is part of the mobile payment initiative Isis, thus it is important to examine its further entry into the payments market.
T-Mobile has gained significant attention since the launch of its “Uncarrier” campaign aimed at dramatically changing how it offers services and devices to its customers. In the course of the past ten months, T-Mobile has eliminated contracts, offered unlimited voice, talk, text, and data plans, extended international data plans, and made upgrading phones and switching carriers easier for customers by offering direct subsidies. These moves have been very successful to date, creating a net gain of 4.4 million subscribers in 2013.1
Coming on the heels of these announcements, the launch of its prepaid card and accompanying money management app, Mobile Money, T-Mobile is continuing to shake up the market while creating significant benefits for its customers. More specifically, T-Mobile has structured its pricing and product features in a very customer-friendly manner. T-Mobile wireless customers have the ability to purchase and use the card at no cost (see Figure 1). Pricing for non-T-Mobile customers is comparable to other leading GPR card products.
Figure 1: T-Mobile® Visa® Prepaid Card: Selected Fees
Figure 2: Mobile Money App by T-Mobile
Source: Google Play, Mobile Money By T-Mobile.
In addition to the physical card, T-Mobile is offering a feature-rich mobile app, Mobile Money. The company is positioning the app as a way for customers to manage their money with features including balance view, transaction history, check deposit, bill pay, and account to account transfers, while also enabling phone service payments, creating a potentially sticky feature for T-Mobile wireless customers.
The implications for the prepaid card market are two-fold. One, this announcement, along with the release of competing offerings from Sprint and the Boost Mobile (Boost Mobile Wallet is a plastic prepaid card and money management app), provides further evidence that the GPR market is becoming even more competitive as new entrants offer innovative products. Two, it may signal a shift in GPR pricing models for some large players. Instead of relying on customer fees, competitors such as T-Mobile may use GPR as a means to deepen existing customer relationships for their core businesses (i.e., wireless phone service). Such a development could place further pricing pressure on more traditional GPR products.
1 T-Mobile Press Release “T-Mobile US Reports Preliminary Fourth Quarter 2013 Customer Results” January 8, 2014.
For more information, please contact Jeff Crawford, Manager, specializing in Debit and Prepaid, firstname.lastname@example.org.
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