One serious barrier to reaching the mass market, I think, is pricing. Not only that it is high, but that it is opaque. It’s difficult for people to work out how much a prepaid card is actually going to cost them, and this is an important calculation because the results are amazingly variable.
The study reveals that expenditures for the same transactions can range from $10 per month to almost $100 per month depending on choice of product or provider. Results indicate that there is no one financial strategy – whether based on using a traditional checking account, a prepaid card or check cashing services – that is right for all people.[From Payments News: How Much Do Prepaid Cardholders Spend Monthly on Fees? – June 01, 2009]
We somehow need to persuade the industry as a whole to introduce some transparency and perhaps even some standardisation here. When I went to get a prepaid card for my son, I was shocked when I got home and read the charges — needless to say, that card was never recharged. Now that O2 and NatWest are shaking up the sector in the UK, there might be some more new ideas coming, which can only be good.
Another factor might be form. Are cards just too boring? I wonder if we could add more sex appeal by driving new technology (in particular, though I know I will get into trouble for mentioning them again, stickers) to deliver more compelling prepaid products in specific, but large, niches — you know, the usual kind of thing, sports stadiums, events.
Checking my notes from Prepaid 09, I saw a talk from Mukuru, a mobile money transfer, voucher, coupon play from Zimbabwe that I’d meant to blog about before. I wrote that it was a great talk including lots of real experience:
- Lessons about building a mobile money transfer application in a place where there is no GPRS and the OTAs don’t work, transforming a customer service centre into a telephone sales centre and more.
- Lessons about KYC/AML (if you send someone in ZImbabwe $100 in fuel you don’t have to be KYC’d, if you send them $100 worth of airtime you don’t have to be KYC’d, if you send them $100 in food you don’t have to be KYC’d, but if you send them $100 in cash you have to be KYC’d).
But what it mainly made me think about was how you run a web site in a country where the inflation rate is changing daily, where seven zeroes vanish from the currency and you have to get the developers to get the site back up again as quickly as possible and where if you mess up a payment so that if it arrives a day late to payee gets two-thirds less! Very thought provoking: thanks again to Mukuru for a valuable session.
These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]
Another bank product in search of a use case