By understanding consumer habits and financial needs, you can create efficient, safe money management tools for individuals, families and groups.
By Tracy Kirkland, FIS
As your customers’ banking habits continue to change, innovative prepaid programs can position you to meet their digital needs and attract new customers at a lower cost, all while extending your brand, increasing the value of your rewards program, and even earning interchange on retail and online purchases. Depending on the customer’s stage in life, your prepaid offering can easily adapt to different financial needs.
Individuals and Young Consumers
Elena always thought of prepaid cards as a quick way to come up with a birthday, wedding or baby shower present when she doesn’t have either a gift idea or time to shop. Little did she know how far prepaid has come since she turned 5 and received her first gift card.
As a single, 25-year-old customer service representative, Elena is just getting started financially. Even though she is a customer of your bank, she hasn’t stepped foot in one of your branches for years, doesn’t own a checkbook and seldom carries cash. However, one thing is always with her—her mobile phone.
Thanks to your promotion describing your new prepaid program, she learned that her phone is all she needs to manage her money, plus earn and redeem loyalty rewards, too. When it’s time to deposit a check, pay bills or do her shopping, she can take care of it all using the mobile app. Despite the fact that Elena is not a regular visitor to your branch, you’re meeting her needs, and her loyalty will grow as she becomes more established financially.
A Practical Tool for Growing Families
For customers Sam and Kristina, making ends meet is a daily challenge. As they approach their 30th birthdays, they find themselves juggling multiple jobs to support themselves and their two toddlers. They’ve applied for credit cards with your bank and other providers, but to no avail because they haven’t yet established a viable credit score. Clearly, they need other ways to manage their money, and your institution can help.
By introducing them to your prepaid program, its built-in tools will make it easy for them to set aside spending money and funds to pay bills, plus it will help them prepare and stick to a budget. They can keep a watchful eye on their balance in real time, view their transaction history and transfer money in seconds.
Best of all, your prepaid offering will allow them to set aside savings toward their goal: a house of their own. The loyalty points they earn will go a long way toward that dream, because they continuously earn points that entitle them to discounts on things they need. Once they’ve started accumulating points and redeeming their rewards, chances are they will remain long-term customers.
A Travel Fund for Empty Nesters
With help from your bank’s savings and investment programs, Charles and Susan just sent their youngest son off to college, a bittersweet milestone. Yet with just the two of them, they’re ready to plan some visits to destinations long on their wish list. They’re both still engaged in careers they love, but they want a way to start accumulating funds to fulfill their dreams of exploring the highlights of South America, Australia and Asia. Your bank had the answer: a prepaid solution that lets them set money aside so it doesn’t get caught up in day-to-day living expenses. As they watch their savings mount up, Charles and Susan already are planning next year’s trip.
Money Management for Clubs and Associations
Hannah, a college student at the University of Georgia, serves as her sorority’s treasurer. Juggling these duties with her studies in business management leaves her little time for anything else. Her sorority sisters constantly use their parents’ credit cards or come to her for cash to buy food and decorations for special events, reimbursements for gasoline used when running house-related errands, purchasing supplies and more. Dealing with unhappy parents, chasing down receipts, handling cash, retrieving change and reconciling the account is becoming unmanageable.
Hannah’s boyfriend, who performs similar duties at his fraternity house, told her about a new prepaid program that simplifies the process. Since adopting the same program, she now distributes prepaid cards to sorority members who regularly need funds to conduct the house’s business. Now Hannah just uses her mobile phone or goes online to track expenditures, reload cards as needed or, in the case of a lost or abused card, she can suspend it. No more personal credit card use, no lost cash and no impatient sorority sisters or parents waiting for reimbursement. Hannah’s mom is so impressed with her daughter’s ability to handle the sorority’s finances, she visited your branch and signed up for a similar program to help her manage her garden club’s expenditures.
Diverse Needs within One Family
Mike and Lia Ables are great customers. They have fulfilling jobs, a spacious home and good credit. Still, money is tight with a daughter in high school, a son in college, and caring for Lia’s parents who live with them and need professional health care assistance. The Ables needed a way to separate the various types of expenditures.
Mike spoke with a representative at your bank about opening separate checking accounts; one for household expenses, one for school-related obligations and one for eldercare. Traditionally, any banker would have been more than happy to open three separate accounts. However, this professional recognized that a different alternative would better serve his customers. He directed Mike instead to a new prepaid program that would keep accounting simple and provide security in sharing funds.
Now Mike and Lia can provide their kids with prepaid cards for school supplies and emergency money for the unexpected, as well as one that enables the grandparents’ healthcare worker to take care of medical-related expenses, prescriptions and more. It’s easy for Mike and Lia to use your website to track expenses for each type of expenditure and replenish funds as needed, all in real time.
Elimination of Paper Checks and Cash for Businesses
Jack, the owner of a trucking company who uses your bank’s commercial services, has solid business credit and operational processes. He has been talking with your business banking representative about ways his company can go further in eliminating paper checks and cash for payroll and purchases, both of which are operationally cumbersome, expensive and inefficient. Many of his employees do not get direct deposit of their pay, and for them to make purchases needed on the job, a corporate credit card is not a good option.
Your banking professional suggested that Jack consider the use of prepaid accounts as a solution to both his payroll and purchasing operations. While streamlining his processes, prepaid would also provide a mobile, low-cost and secure way for him and his employees to manage functions critical to running the business and allow them to focus on future growth.
Safety, Security and Control
Thanks to the evolution of prepaid cards, your financial institution is in a position to provide new freedom to individuals, families, groups of people and small to midsize businesses. You can make it possible for them to avoid the inefficiencies and risks of carrying cash, paper checks and shopping online, as well as help them save on the fees associated with credit card purchases or the built-in limitations of checking accounts. Because the distribution of funds occurs on a tightly controlled basis, it’s become easier than ever to eliminate the potential for compromise that can threaten your institution and its customers.
Because prepaid programs provide so much flexibility for spending and saving—especially when coupled with feature-rich mobile apps and loyalty programs—they strengthen financial literacy among users who want to better manage their spending while maximizing their buying power.
Tracy Kirkland is the product development lead for FIS prepaid products and, with more than 18 years of payment industry experience, has been engaged in the prepaid space since its infancy through the evolution of today’s digital mobile landscape. For more business insights, visit the FIS Payments Leader blog.
In Viewpoints, payments professionals share their perspectives on the industry. Paybefore presents many points of view to offer readers new insights and information. The opinions expressed in Viewpoints are not necessarily those of Paybefore.