The prepaid market is experiencing dramatic growth — new technology, bursts of innovation and added channels to keep pace with.
The Straight & Arrow tapped industry pro Matt Frye, Chief Commercial Services Executive for FSV Payments Systems, leading prepaid processing solutions provider, to get his perspective on the growth of prepaid, and what to anticipate moving forward.
S&A: The prepaid market is expanding quickly with many companies jumping into the field. How can companies new to the market differentiate themselves from the pack?
MF: With so many niches and different components in the lifecycle of a payment, it should be easy enough to pick one, and become excellent. The problem has been trying to reinvent the entire wheel, when the spokes work just fine. It’s usually an extension of the existing solutions that turns heads, and can offer lucrative returns.
S&A: What do you see as the biggest challenge to a new company entering the prepaid market? What are some trends that you’ve witnessed as those companies try to find their place in the market?
MF: Trying to do too much, or trying to do it all. The technology is moving so fast, that it’s hard as a start-up to truly cover all the bases without getting distracted. Delivery, acquisition, mobile, social…these are plenty to keep us focused without trying to tackle settlement and the flaws in ACH. I recommend that we stay focused.
S&A: Maximizing impact and adoption of a prepaid program are essential to the program’s success. How are companies doing it best?
MF: This is the question everyone wants answered, and cracking this code sets prepaid participants apart from others. But the truth is very different based on the vertical and the value proposition, and is complicated by distribution, card association and even differences with issuing banks. The regulatory environment makes it even tougher. The real winners are seen getting to know their customers better than ever before, whether an intermediary or the end-cardholder. With so much choice, knowing who your customers really are is the only answer.
S&A: Consumers can change their minds pretty quickly. Do you see their mindset about prepaid shifting? What features are consumers looking for most in a prepaid product?
MF: Prepaid is being used and consumers do not even realize it. Some cards are still called ‘credit cards’ by the cardholders themselves. So it’s not necessarily educating about prepaid in some cases as it is about educating about the utility of the product and the features. A Visa, MasterCard, Amex or Discover card can be used in so many ways to help with disbursements, provide instant access to funds, replace a bank account, compel someone to make a purchase or simply as a gift. It’s just a matter of selling the service it offers, not the fact that a ‘prepaid’ card is delivering that service.
S&A: What’s next for prepaid? What will be the impact of mobile payments and how do you think the payments market will evolve?
MF: Mobile and social are both compelling initiatives for anyone engaged in prepaid. The development efforts will be focused there, and then its acquisition strategies and supporting technology. Mobile and social media have the means to change the delivery and form factors associated with payments in general and prepaid is best positioned to deliver on that promise.