Industry Views: Trends and Resolutions for 2014 (Part 2 of 2)
Q2. What should the industry’s New Year’s resolution be?
While there’s been enough innovation in handsets to make contactless payments a reality, we still haven’t defined the value proposition for merchants, and many consumers who seem perfectly content to swipe a card. What the industry should focus on instead is using technology to make money management easier and even more affordable for the 70 million unbanked and underbanked consumers who need better options. Gaining people’s trust and changing behavior from using a check casher to a digital account is a big hurdle, but mobile phones truly have the potential to become the gateway to the economy for underserved consumers.
—Alpesh Chokshi, President of International Payment Options, American Express
Consumers continue to be very happy with prepaid products, which they use in various forms—prepaid telecom, GPR products and, of course, gift cards. In 2014, consumers will continue to demand prepaid for gifting and everyday purchases as prepaid gives them so much more control of their finances. Blackhawk Network researches consumer needs and understands that consumers want more of an omni-channel experience. The industry must not only continue to make physical gift cards easily available, as that remains the majority of the business, but also add complementary digital options to fill additional needs of the consumer, including online and mobile sales.
—Teri Llach, Chief Marketing Officer, Blackhawk Network
2014 will be a watershed year for the prepaid industry that shapes the direction of prepaid for years to come. The CFPB’s rules on prepaid will play the biggest role in defining the future of prepaid, but in 2014, the prepaid industry’s top priority should be improving consumer protections.
As the industry continues to drive increased value and growth of prepaid products, criminals are increasing their targeting of our segment. While existing laws and industry safeguards help limit most consumer losses, the industry needs to evolve and invest to further prevent fraud targeting prepaid cards. Fraud schemes not only undermine consumer confidence and raise regulatory concerns, but have the potential to lead to increased prepaid fraud losses for financial institutions and their clients.
In 2014, the industry should resolve to protect our customers by committing to improve the process of detecting and mitigating prepaid fraud.
—Brian Triplett, SVP, Head of North America Prepaid Products
Given the recent Target breach, and in 2012 the Bank Muscat US$42 million breach, the resolution for the industry must be 100 percent data security. This is not a “nice to have” but a “must have.” Without this, we will lose consumer confidence in electronic payments.
—David Parker, Director, Polymath Consulting
One industry New Year’s resolution should be to focus on meaningful problems that prepaid can solve as opposed to introducing feature/functionality purely for the sake of change. While many different flavors of prepaid cards exist in the government, corporate and consumer sectors, the products that are successful are those that truly solve a problem. The evolution of GPR demonstrates this as 15 years ago when reloadable products were initially introduced, the early problems that were being solved became more apparent—the need to quickly, safely and cost-effectively get money to a child in college, a retired parent, an employee, the list goes on. Those products have evolved into the next-generation offering easy access, less costly, additional capabilities and more choices. We’re all in this business to make money, but as we head into 2014, let’s consider the consumer of our products and introduce innovation that helps prepaid focus on solving problems in a meaningful way. Success will come for those products that do.
—Shelly Schneekloth, Vice President Operations, FIS
The industry must resolve in 2014 to invest more time and innovation in the prepaid space as a whole, looking for and accepting new ways to displace cash. There’s no denying that the current regulatory environment can make the prospect of working in the prepaid space somewhat challenging. However, increasing interest among potential adopters in different types of prepaid products—from those designed for use at retail to payroll cards and everything in between—makes advancing the industry an imperative. So, too, does the burgeoning number of credit-worthy consumers who are turned off by the high cost of bank accounts. Potential program managers are waiting and receptive.
—Lori Breitzke, Founder and President, E&S Consulting
Talking specifically about the U.K., I suggest that the industry’s resolution should be to fully understand the benefits of digital payments. While in some sectors of the prepaid industry digital is very new, particularly prepaid gifting, the concept has been around
for some time. However, we’re just not seeing the engagement from retailers. This means that consumer education and understanding is lacking. It seems clear that there are a number of cost benefits to digital and also opportunities to open up new customer sectors, but the true, overall commercial benefits have not been explained and, therefore, digital is perceived to be a “nice to have” rather than a “need to have.”
—Andrew Johnson, Director General, UKGCVA
From a European perspective, the prepaid industry must use 2014 to gain greater clarity and influence over both the pace and nature of regulatory change. During 2013 we saw much debate between European regulators and industry bodies with a view toward tightening specific areas surrounding prepaid while ensuring the single market drivers continue to encourage growth within the region.
In the latter part of 2013, we saw strong underlying growth in the interest in prepaid ranging from supplier investment to the use of prepaid as a business solutions enabler. From a U.S. perspective, Raphaels Bank firmly believes the U.S. prepaid community can support this European growth by adding value with its deep understanding of the product. As a New Year’s resolution, we would encourage U.S. program managers to commit to a 2014 European launch strategy to satisfy current demand and help drive the market forward.
—Andrew Downes, General Manager, Card Services, Raphaels Bank
Companies buy prepaid/gift cards when they have a reason—it helps them with a business objective. Our offering needs to be relevant to these needs. If a credit card company wants to increase loyalty, a car manufacturer wants consumers to test drive a new car, a bank wants to encourage employees to sell more of X or Y, then the product we produce and sell needs to be desirable and easy to use/understand to encourage these behaviors.
We need to continue to offer ease through choice, so customers can choose what is easy and relevant for them. If that’s via plastic or digital or another form fine, but it must be easy, relevant and desirable to ensure a successful 2014.
—Brian Dunne, Managing Director, SVM Europe
I propose that the payment industry resolve to champion the integration of payment technologies with marketing.
Sundry companies have scratched that surface and produced respectable results, but as yet we’ve seen little more than card loyalty reward programs dressed up in a new suit of techie clothes. Truly integrating payment data with all of the marketing—location, loyalty, frequency, spend, preferences, patterns, demographics, psychographics, offers, appeals, creative, timing, and more—offers a powerhouse for enhanced results through an enhanced customer experience.
It’s coming. The only question is: Who will lead? Given that financial institutions handle merchant and client data, and in many cases are the payment mechanism, no one is better situated to take that lead.
—Matt Wilcox, Managing Director, Marketing Strategy and Innovation, Digital Payment Solutions, Fiserv
Click here to read the responses to: What Will Dominate Prepaid and Emerging Payments in 2014?