2018 has seen new trends in prepaid like the Starbucks Visa Prepaid Card that was launched earlier this year in collaboration with Chase Bank, and tech darling Stripe‘s new platform for SMBs to create their own cards. And it’s made a statement; an example of companies trying to monetize prepaid payment platforms that generate recurring revenue streams and take a share of interchange fees they would not otherwise see.
Typically, prepaid payment platforms have been driven by B2B organizations for employee rewards to reward channel partners for meeting sales targets and to rebate consumers for purchases. Branding disbursements with a company logo or slogan keeps the brand alive in the payments ecosystem and reminds the recipient where the reward came from.
It also delivers a better overall consumer experience than simply issuing a cheque and it ensures that these payments are not co-mingled with everyday chequing accounts. These use cases are examples of prepaid payments that have not only stood the test of time but are continuing to gain steam.
What’s new, as demonstrated with the Starbucks example, is that companies have begun to monetize the virtual and physical cards they issue by enabling cardholders to reload the cards using their own personal funds, thus turning the cards into general purpose reloadable cards (GPR). This gives the cardholder the same utility they would have with any credit card used to book a hotel online or make an in-person purchase at a retailer – like Starbucks. It also addresses the needs of underbanked and subprime consumers who may not qualify for a credit card. Remember, these are pre-funded cards.
Why are companies like Starbucks and Stripe doing this? In addition to building loyalty with their brand, they are now sharing in the interchange and other revenue streams typically reserved for issuing banks and program managers.
The good news is that any SMB that is looking to monetize prepaid payments circulating in the field now has the power to make it happen.