Byline: Will Hernandez
Prepaid debit cards that come with celebrity endorsements over the years have showed little staying power while whipping up storm clouds of controversy.
Reality-show stars Kim and Khloe Kardashian, basketball hall of famer Magic Johnson and hip-hop music mogul Russell Simmons, among others, each had or has a prepaid debit card in the market.
Only Simmons' product remains despite claims he is bilking African American consumers with a fee structure critics view as unfair (see story).
But despite some shaky endorsements, alliances between celebrities and prepaid debit card providers continue.
In November, Rapper Lil Wayne's music recording label Young Money Entertainment launched a cobranded card with Discover Financial Services (see story). And champion boxer Manny Pacquiao is behind a Visa-branded prepaid debit card featuring a remittance service that the product's marketer primarily will promote to Filipinos living in the U.S.
Using celebrities might be an effective way to catch the attention of potential prepaid cardholders and instill trust in financial services, notes Jennifer Tescher, president and chief executive of the Chicago-based Center for Financial Services Innovation.
Tescher warns, however, those celebrities should not go out of their way to violate that trust through high fees or confusing product design.
"I actually think these celebrities should have a higher bar in a way," Tescher tells PaymentsSource. "It's unfortunate to think they are attempting to transfer people's trust in them to trust prepaid and then sort of break the promise and then ruin prepaid's reputation."
By now, the industry is well-versed in the Kardashian Kard's disappearing from j-hooks nationwide.
The charge for the card was $59.95 for six months or $99.95 for a year, and the price included the card's $7.95 monthly fee and an initial load fee of $5. Though the card's monthly fee structure was somewhat similar to other offerings, the initial fee caused sticker shock among many watching the industry (see story).
UniRush LLC, founded by Simmons, changed its fee structure shortly after the Kardashian Kard was shelved (see story). Under its previous fee structure, the Visa-branded RushCard and Baby Phat cards came with a $19.95 purchase price that was restricted to a pay-as-you-go plan. That plan also included a $1 fee for each transaction capped at $10 per month and a $1.95 ATM withdrawal fee.
The company's Diamond card had a $3 purchase price and a flat $3.95 monthly fee, and cardholders could conduct free signature-based purchases and two free ATM withdrawals per month. Those options were not available with the other cards
Under the new fee structure, holders of UniRush's cards pay monthly fees ranging from $3.95 to $14.95, depending on which plan they choose for all three cards.
In November, UniRush introduced a $2 monthly rebate to users who maintain an averaged balance of at least $500 across all of a customer's accounts (see story).
Some observers questioned the rebate's value.
"I'm having a hard time thinking about where they could offer that to the masses in a majority of low-income cases," James Van Dyke, the president and founder of Javelin Strategy and Research, told PaymentsSource sister publication American Banker.
Meanwhile, critics continue to skewer Simmons for the RushCard and his support for the Occupy Wall Street movement (see story). …