Prepaid – the Other Fintech
I recently had the pleasure to participate on a panel at the Opal Fintech conference in Rhode Island with Silvio Piserchia (Mastercard), Tim Sloane (Mercator), and Kirsten Trusko (True Course Advisory Services) to discuss Prepaid cards.
Over the last couple of years, I have attended several payments conferences, forums, and breakout sessions geared towards Fintech. Most, if not all, seem to exclude, forget to include, or do not highlight the importance of Prepaid Cards in driving the growth of Fintech’s especially in the payments space.
It must be acknowledged that Prepaid has been around for a while and has established itself as an important payment tool for all consumer segments. It has already gone through the growing pains that the “Fintech” industry is experiencing. And Fintechs are more and more using prepaid as their preferred product to enter the financial services market. For this reason, in June, Mastercard launched a new program called Accelerate designed to support the ambitions of players in the Fintech sector through tailored support arrangements including access to insights, tools, technology and investment to support innovation.
As the global workforce changes and the Gig economy grows, shared economy platforms are providing the perfect opportunity for non-traditional financial services companies to take advantage of prepaid as a platform for innovation. Mastercard has built a Prepaid Gig solution to better solve both the needs of Gig workers and the platforms that employee them. Prepaid can be tailored to many other use cases as well. For example, Digital Payroll cards help workers ensure they receive the full amount of their wages quickly and safely, and help employers satisfy government mandates.
Additionally, now that the regulations issued by the Bureau of Consumer Financial Protection are in place, we are starting to see a Prepaid renaissance in the marketplace. Traditional financial organizations are partnering with Fintech and other emerging companies to design products that fit the everyday financial needs of Americans. For instance, PayPal and Mastercard have developed a prepaid card which links to a user’s PayPal balance; Green Dot, Apple, and Discover are launching a virtual prepaid card; and, most recently announced, Starbucks, Visa, and Chase are creating a prepaid card linked to Starbucks rewards.
The government takes advantage of the flexibility of the Prepaid platform in any number of Prepaid programs. I think it is important to note that every state in the Union has utilized some form of Prepaid card to disburse a benefit. On the federal level the U.S. Treasury operates (alongside Mastercard, Conduent and Comerica) the wildly successful Direct Express program.
Prepaid is everywhere, yet it is unassuming. Collectively the industry must come together and do a better job of amplifying all the positive changes that Prepaid has been leading over the last 10 years. Prepaid is too bold to stay in the shadows any longer. The time has come to tell our story.
Written by Brian Tate, NBPCA, & Silvio Piserchia, Mastercard.
In the past year or so, the prepaid community has expanded through new products, perks, and partnerships. PayPal and Mastercard rolled out a prepaid card which links to a user’s PayPal balance; Green Dot, Apple, and Discover are launching a virtual prepaid card; and, most recently announced, Starbucks, Visa, and Chase are creating a prepaid card linked to Starbucks rewards.
Look how far the industry has come: major retailers and technology companies are joining the prepaid community by unveiling prepaid products with impressive benefits and uses.
Not to toot our own horns, but these alliances are a result of the effort the NBPCA has put into making the prepaid rule workable so the environment to innovate remains welcoming and open. If companies had to jump through overly burdensome hoops in order to introduce a new product, it might have kept them from branching out entirely.
Over the six years the CFPB worked on the prepaid accounts rule, NBPCA was there every step of the way. In meetings and comment letters, we made our members’ concerns known in order to protect the pioneering spirit of the prepaid industry. Fortunately, the CFPB recognized many of the issues we had raised and made revisions to the rule.
Now, companies like Starbucks, Visa, and Chase can develop a prepaid card that makes your morning coffee run or afternoon caffeine boost that much easier. The benefits of prepaid—fast, secure payments that help cardholders avoid debt and checking account fees—are amplified when other bonuses (like earning free coffees!) are added on.
We look forward to continuing our work with the prepaid community in order to drive fintech innovation forward. And, if you’d like to be part of the trailblazing work we’re doing, check out our membership page!
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