Magazine article American Banker

Prepaid Card Use Shows More Differences from Bank Habits

Magazine article American Banker

Prepaid Card Use Shows More Differences from Bank Habits

Article excerpt

Byline: Bailey Reutzel

Even though prepaid cards are already widely considered a product for the underbanked, usage patterns are showing more clearly just how different prepaid card users are from bank customers.

"At NetSpend, we actually see 40% of our ... loads occur outside of traditional banking hours," says Michael Gray, vice president of operations at NetSpend, during an April 8 panel discussion at SourceMedia's 25th annual Card Forum & Expo in Boca Raton, Fla.

Similarly, Gray says he considers the distribution of prepaid cards in nonbank retail stores to be one key to prepaid cards' mainstream success.

"The prepaid consumer is different from a credit card consumer or traditional DDA (demand deposit account) consumer," he says.

Rather than adhere to branch hours, prepaid card users favor alternative channels to manage their accounts. NetSpend sends millions of wireless alerts to tell customers when their payroll has been deposited, and 60% of customers use a smartphone for account access, Gray says.

Since prepaid card users don't carry checks, NetSpend must also provide alternate ways for its customers to pay their bills, he says. NetSpend also offers voice support for consumers who prefer to call a human being, he says. The processor Total System Services Inc. is buying NetSpend in a $1.4 billion all-cash deal.

Matt Kerr, director of strategy and business development at H&R Block, spotlighted partner Plastyc for taking a different approach to serving prepaid card users. …

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