Reward and loyalty prepaid debit card programs
As other prepaid markets develop, banks can extend top-up payment services to these markets and continue to grow payment volumes and revenues. Banks can position themselves as the primary providers of top-up payment services for third party prepaid accounts by providing trusted and convenient payments using bank-issued cards. Banks who provide no fraud guarantees for both customers and prepaid account providers will win in this space.
Banks who establish top-up payment services are then in a strong position to begin to develop credit/prepaid co-brand cards in partnership with third party prepaid account providers. Analysing prepaid top-up transactional data provides critical insights into customer's prepaid behaviour and this information can be used for new product development. I envisage the open and closed-loop dual card model becoming the dominant model for co-brand cards for reasons already proven by the Starbucks Duetto card.
Linking open-loop prepaid cards to existing credit and debit cards can provide an innovative route for banks to enter the youth market and profitable person-to-person international remittance market. Existing cardholders can order open-loop prepaid cards for friends and family and transfer funds from their credit or current account to prepaid cards. Prepaid cardholders can then use these funds at merchants and ATMs anywhere in the world. Banks should develop this strategy as part of a wider extended household proposition designed to increase customer loyalty. In this context prepaid companion cards are the bank equivalent of the retailer gift card.
