Q&A with Michael Parlotto, InComm
Michael Parlotto, VP, Emerging Technologies, InComm, gives the lowdown to Paybefore on the evolution of prepaid and what the future might hold for the industry.
- Who is the prepaid consumer today and how has this changed over time?
The term “prepaid” is taking on a broader and broader meaning. Initially, prepaid had the image of just being products for unbanked and underbanked consumers. While those markets still play a role, the industry has become so much more. Prepaid has become much more mainstream over the last 10 years and is made up of consumers from all walks of life and economic segments.
Today, consumers use prepaid for a wide variety of reasons, like trying services they may not be ready to commit to through a postpaid contract or agreement terms. Businesses use prepaid products to provide employees with predefined travel expenses.
And we can’t forget about the millennials who are interested in using non-traditional financial institutions and leveraging open-loop prepaid cards as their preferred payment method. Prepaid cards are also emerging in the contextual payments space as a secondary layer of security to limit the customer’s exposure. The prepaid consumer is everywhere.
- What are some of the biggest changes you’ve seen in the prepaid industry over the last five years?
In the beginning, prepaid had the perception of a lower-end offering with limited services and devices that had already made their way through the postpaid business. You don’t really hear that as much today. Prepaid products are fully functional and priced competitively to offer consumers a true alternative.
In the wireless space, you see unlimited pricing plans and smartphones with all the latest features including mobile payments.
In the case of financial services products, like open-loop cards, you see features like remote check deposit, bill payments and tokenization which were previously only available on bank products.
Additionally, I think one of the biggest changes is the sheer variety of prepaid products available today across a wide range of categories. InComm has helped pioneer some of these categories in the last 25 years. While you still see wireless airtime and closed-loop restaurant cards on the retail displays, there has been expansion into categories like gaming, social media, streaming media, software and many more.
- Your title is VP of Emerging Technologies. What are some emerging technologies that will affect the prepaid industry?
I believe contextual commerce will have a clear impact on the prepaid industry. Since its early days, InComm has been focused on reducing friction for consumers and providing easy ways to purchase the products and services they need from our retail partners in an omnichannel environment so this isn’t a completely new concept for us. We’ve even seen early signs that consumers are storing prepaid products in virtual accounts and using them for purchases across several channels and well-known contextual commerce retailers.
Based on our mission to continue to transform the shopping experience by continuously driving innovation, we are actively working on new ways to enhance our proprietary network and service offering while employing emerging payment technologies like virtual accounts/card on file, carrier billing, mobile wallets, wearables and IoT where they make sense.
- How is the industry different across the many geographies in which InComm operates? Are they all being affected by the same omnichannel concerns as in the U.S. or are there differences?
InComm has local resources in many of the geographies in which we sell to keep up with the ever-changing prepaid landscapes. Some of the differences are tied to how each culture interacts with the products and their buying habits. For example, in the Asia-Pacific markets, virtual accounts and mobile wallets like Alipay and WeChat have a very high adoption rate and they are leveraged throughout a consumer’s daily activities.
A consumer in one of these markets may not start their prepaid relationship with a plastic physical card but instead get a digitally delivered product to their mobile wallet. In these same markets, that consumer may not enter a retailer’s store to buy some of their prepaid services but instead buy online using carrier billing or a fund source stored in their wallet. If they do enter the store, self-service experiences are the norm as human interactions are limited to exception handling. All of this points to the fact that omnichannel concerns are focused on driving online self-service and providing that one-stop destination for all a consumer’s shopping needs.
Some of these same mobile wallets, as well as U.S. companies, are looking to advance many of these same technologies though adoption may still be some time off.
- Let’s talk about FinTech. What role do you see prepaid playing in FinTech or vice versa?
I see FinTech and prepaid as having a symbiotic relationship. FinTech firms are at the forefront of launching new and innovative financial services products that, in some cases, are exactly what prepaid customers are asking for. The prepaid industry is always looking for new products and services to add to its retailers’ assortment. I really think FinTech firms and prepaid companies can benefit from the other.
Prepaid companies like InComm maintain a large network of retail locations that could allow for FinTech firms like Amazon, PayPal, WeChat, Alipay and others to reach customers where they shop. For example, FinTech customers could deposit cash into their firm’s virtual accounts or pay bills through services like InComm’s VanillaDirect cash-in network.
Prepaid was born out of technology much like FinTech, so the opportunities between the two groups are endless and sure to change as customers’ needs change.
- What are some of the innovations or interesting projects on the horizon at InComm?
As you may have heard, InComm has announced a deal with American Express to become the exclusive distributor of American Express U.S. prepaid cards and to acquire the Serve technology platform. This is a great opportunity to expand our product portfolio and processing capabilities. The ability for InComm to enhance the Serve platform with relevant and impactful features for the cardholder we believe will set the bar in the prepaid financial services space.
InComm has also continued to expand its VanillaDirect cash-in network, which was previously mentioned as key to providing a way for cash-preferred customers to fully take advantage of some of these virtual emerging payments solutions. VanillaDirect allows customers to generate a barcode that can be used to pay bills or fund online accounts using cash at leading retailers.
- InComm has a lot of patents. What in InComm’s technology IP will be most important to the business going forward and why?
InComm is a technology company at its core and continues to put a heavy focus on enhancing and expanding our IT capabilities and IP through development and acquisition. Two of our key focuses are expanding our Enhanced Payment Platform (EPP) and InComm Switch platform, both of which came to us through acquisitions. Our EPP started out as a healthcare products discount engine but has most recently been used to help retailers build affinity with their customers. The capability to provide customized, product-specific promotions that are easily managed at a retailer’s point of sale is a win for the retailer and the consumer.
The InComm Switch, which is also at the backbone of the EPP, is another one of those technologies that provides our retailers’ huge amount of value. Whether it is adding new and innovative payment solutions like mobile payments, loyalty or prepaid or more traditional payments like credit card acquiring into a retailer’s POS, the solution provides retailers with the expertise to quickly implement these technologies as they come.
- What’s the future of the prepaid industry?
The future of prepaid looks bright, as there are numerous opportunities for advancement, whether it be in expanding the network’s reach, leveraging cart adjudication for promotions, using big data to target specific prepaid channels or enabling digital products into any one of the expanding emerging payment solutions. It’s a great time to be in prepaid, and InComm is excited to be working with its partners on the innovations to make our combined vision for the future into a reality.