Prepaid accounts underpin an ever-growing array of payment products—from traditional plastic gift and GPR cards, to cutting-edge mobile and contextual commerce services. That flexibility is great for prepaid issuers, who can use that variety to access a wide swath of potential customers. But it also presents challenges when it comes to meeting the dynamic capabilities required by new types of payment products and retaining customers who have more choice—and less brand loyalty—than ever before.
For issuers that want to ensure they’re keeping up, choosing a processor that offers agility in developing and deploying new solutions is key, according to industry experts who presented during a March 23 Webinar, Powering Smarter Prepaid Solutions with Agile Processing, presented by Celent and i2c Inc. as part of Paybefore’s Spotlight Webinar series.
“Standalone prepaid products are important, but prepaid is even more powerful when it’s used as part of a more complex value proposition,” noted Zil Bareisis, senior analyst, Celent. Bareisis cited several examples of products and services that increasingly embed prepaid accounts, including digital wallets, P2P/remittance services and contextual commerce offerings such as in-app payments.
Along with the growing number of prepaid use cases, there are new expectations among consumers for features such as mobile controls, card-linked offers and the latest security features. Meanwhile, the pressure on issuers is being ratcheted up as new competitors emerge and shorter product cycles demand faster innovation—all while margins are squeezed by regulatory limits on interchange and other revenue. “The market environment is changing beyond recognition, and issuers’ card platforms need to be able to support the new normal,” Bareisis observed.
In this new market, many issuers are finding it increasingly tough to stand out from the crowd. In a live poll conducted during the Webcast, 32.4 percent of respondents cited product differentiation as the biggest challenge in growing their prepaid card business, ahead of portfolio growth, customer engagement and speed to market. And a majority of respondents said they don’t feel their payments business is agile enough to deliver differentiated products to market quickly.
For issuers looking for help in facing these challenges, a processor offering an agile platform can be a powerful ally, according to Lisa Fugate, vice president of product management, i2c. “Most legacy processing systems were never designed to support the rapid changes to products and iteration at the pace that consumers expect today,” she said. Because those systems are hard-coded and not easily configurable, adding new services must be done ad-hoc, with capabilities “bolted on and not truly able to work with new technologies,” Fugate noted. “The technical and time constraints of legacy processing systems are in direct conflict with the agility required to compete in today’s market.”
i2c’s platform is built to avoid such problems, Fugate said. She likened the system’s architecture to Lego bricks, with particular capabilities easily added and “snapped together” with the existing build. This modular, highly configurable design enables issuers to compose solutions tailored to the specific needs of their target users—and then easily test those functions within the platform, she said.
Given the competitive pressures, it’s not a question of “if” but “when” issuers should migrate to a modern processing system to stay relevant, said Bareisis. “When migrating there’s always an element of risk, but the risk of not doing anything is potentially bigger,” he noted.
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