June 5, 2012
The Center for Financial Services Innovation (CFSI) today issued a new guide to help financial service providers improve the design and delivery of prepaid cards. The “Compass Guide to Prepaid” is the first in a series of resources the group is planning to publish detailing how to apply its “Compass Principles,” released in April, to specific products.
Though the principles are aimed toward program managers, they can be used by a variety of other players in the prepaid industry—including issuing banks, processors, payment networks and distributors—to inform their own assessment tools for prepaid programs and determine which features and functionality best fit their own activities, according to CFSI. “The guide was created to help financial service companies ensure they are providing the best quality prepaid products to their consumers,” said Jennifer Tescher, CFSI president and CEO.
The prepaid industry is expected to grow rapidly in the coming year, with the total amount consumers load onto prepaid cards projected to leap 44 percent by 2013, according to Mercator Advisory Group research. With the booming market attracting many new players—including large financial institutions—CFSI saw an increased need for guidance around developing high-quality products. At the Power of Prepaid conference in Washington, D.C., today, Romy Parzick, CFSI’s manager of innovation and research, told attendees that CFSI brought together a diverse group of stakeholders to develop the guide through its Advisory Council on Prepaid, which includes various industry participants as well as consumer advocates. The council also sought feedback from regulators, largely the CFPB, in creating the guide, which was a year in the making. Parzick stressed the importance of ensuring products are good for consumers and providers. “Products have to be profitable and scalable. Profit is not a bad word,” she said. “If products don’t make money, they will not continue to be available to consumers.” Next up on CFSI’s agenda is a product-specific guide for small-dollar credit.