Last month Michael Fiore became the head of global prepaid at MasterCard Worldwide. After a decade at the payments network—working on everything from cross-border P2P and all things B2B—he comes to prepaid on the cusp of great change. The industry is nearing the end of the comment period on the CFPB’s proposed rule on general purpose prepaid cards and the FDIC has issued guidance on brokered deposits that is causing certain issuers to reclassify some of their prepaid deposits. Meanwhile, two of the biggest names in corporate prepaid are looking to sell or spin off their prepaid businesses. But what’s also happened is that prepaid has become a foundational product for MasterCard’s financial inclusion strategy. Shortly after taking the reins from prepaid veteran Ron Hynes, who took a role as president at mobile payments provider Mozido, Fiore sat down with Paybefore to talk about everything from regulation and consolidation to turning ideas into market realities.
Paybefore: Tell us a little bit about your background.
Michael Fiore: I started at MasterCard in 2005, working on our core B2B products—travel and entertainment cards, purchasing cards. Then in late 2008, we purchased Orbiscom, which gave birth to our inControl business, for which I led our global go-to-market strategy. InControl provides cardholders and companies with the ability to control spending—whether it’s for budgeting or reconciliation—using coded controls and virtual card numbers. The control aspect made it a beneficial precursor to prepaid, but my last role—which focused on our personal payments business—was even more directly linked with prepaid. Personal payments are basically anything that’s not purchasing goods—so cross-border remittances, domestic person-to-person, bill payments, mobile money, B2C and government payments. I often worked with the prepaid group where those businesses overlapped.
Paybefore: What’s your first order of business as head of prepaid?
MF: I’m visiting all of our regions, meeting with our teams that handle our prepaid activities and strategies on the ground. I have been through Singapore, our LAC Miami office and obviously the US. Next I’s visiting Dubai and London. To be effective, you really have to understand the challenges and opportunities in each market.
Paybefore: Where does prepaid fit into your global financial inclusion strategy and in which geographies is prepaid gaining the most ground?
MF: MasterCard’s commitment to financial inclusion comes from the top, and prepaid is at the very center of that effort. Prepaid is a critical component as we bring multiple assets to bear, such as our capabilities in processing, disbursements, benefits and money transfer.
|“Prepaid is a critical component of a mobile wallet in any market because it’s all about reaching as many consumers as you possibly can.”|
The U.S. is the largest prepaid market for now, but without a doubt, we’re seeing growth in the Middle East, Africa and Asia-Pacific, LAC—everywhere. One of the most interesting programs is in Egypt, where we’re working with the National Bank of Egypt and mobile network operator Etisalat to provide access to electronic payments via a mobile phone. Here’s a country where 65 percent of consumers are unbanked and everything is prepaid—even utility bills have to be paid up front. When we can make that process digital, it’s powerful. Suddenly, as a consumer, you don’t have to travel across Cairo with a pocket full of cash to pay your bills.
Paybefore: We’ve heard a lot about the key role of prepaid in mobile/digital wallets because they open those transactional vehicles up to everyone. Is that how you see it?
MF: A financial product being bundled with a mobile phone has massive growth potential around the world. In emerging markets, specifically, mobile is the necessary channel to reach consumers—and prepaid is the foundation for the future of payments in those places. But prepaid is a critical component of a mobile wallet in any market because it’s all about reaching as many consumers as you possibly can and some of those consumers will want to use prepaid, others debit and credit accounts
Paybefore: Coming back to prepaid in the U.S., you’re coming into this role at a time of changing regulations, specifically the CFPB’s NPRM. Will MasterCard be submitting comments?
MF: Regulation isn’t a new area for me or MasterCard. Money transfer is something I’ve spent a lot of time on, and there’s a lot regulation around sending money across borders. I’ve gotten up to speed on the proposed rule, and I think the intentions around the rule are very good—that consumers must be better informed and that there must be fee transparency across products. The question is: Can these rules be executed effectively, so they do what they’re intended to do?
Consumer experience is one of the most important things for any product. So providers will have to execute against disclosure rules while maintaining a good customer experience. And, yes, MasterCard will be submitting comments on the proposed rule.
Paybefore: Let’s talk consolidation for a moment. We’ve seen JPMorgan and Citi prep their corporate prepaid businesses for sale/spinoff. Will we see more sales in the corporate/government sector even though your commissioned research suggests it’s one of the hottest growth areas?
MF: I certainly can’t speak to the considerations of the big banks, but I can say that corporate prepaid is a strategic focus for us. We believe that prepaid, especially the corporate and government sector is an important area for growth, and we’re focused on it. And, there are plenty of banks and program managers to work with us.
Paybefore: What other forces do you see affecting the industry?
MF: When I think about payments overall, there’s a bit of a trifecta—regulation, technology and innovation, and the third would be economy itself. We’re seeing technology companies—the giants and the smaller innovators—getting involved in payments and contributing value and good ideas. Technology always will be a force that helps new players come in, helps existing players get bigger and, ultimately, creates more value for consumers.
As the economy improves, I expect the mix of prepaid programs to shift, for example, from benefits to payroll and incentives.
The good news for prepaid is that even though we’re seeing some natural consolidation as the industry matures, there’s still so much green field. Prepaid solutions can be applied to almost every type of payment across demographics—from families that want to empower children at school to the traditional underbanked consumers. We’re nowhere near mature in terms of penetrating all the use cases for prepaid.
Paybefore: You mentioned tech giants and others entering payments. How do you approach strategy and planning with so many companies trying to disrupt or play in the payments space?
MF: Payments certainly has the appearance of moving fast in certain areas, but what’s important from a strategy perspective is not getting distracted by things that go on at the edges. You have to be very focused on creating indispensable value. We want our network to be used by any consumer with any device. If we continue to provide a flexible, safe and secure network, along with services that ensure a great user experience, then we’ll continue to have staying power.
The other thing I’ve learned in my career is that it’s one thing to have a great idea. It’s fantastic if you can develop a strategy around that idea, but the real value is in having leaders in your organization to take that idea to the end zone and actually bring it to the market. If you can’t do that, nothing else matters.
Paybefore: Speaking of leaders, you’re taking over for a well-known and well-respected prepaid pioneer. What’s something you’d like our readers to know about you?
MF: Ron’s a good friend of mine and he’s done fantastic things for this industry and for MasterCard. As for me, I’ve been in payments for 15 years and I think my philosophy applies across commercial, consumer and emerging payments. It’s all about using technology and innovation to provide value to users. I started out as a Web developer, so I learned early on the importance of a good consumer experience.
Paybefore: What are you most proud of in your career so far?
MF: We talked earlier about activities around financial inclusion, I spent some time in Egypt as we launched our mobile money products there. It was important for me to be there and experience how different it is. I realized I’d taken so much for granted in terms of access to financial services. It’s life-changing to be able to have access to financial services, and I’m proud to be helping bring that access to people around the world and to work for a company that is genuinely committed to making a difference.