Baby, baby, baby or prepaid, prepaid, prepaid?
As more and more Americans change their tune in favor of prepaid cards, competitors in the space are turning to celebrity endorsements in an attempt to target specific demographics.
Those are the findings highlighted in a Bloomberg report that looks at prepaid cards endorsed or owned by the likes of Justin Bieber, Suze Oreman, the Kardashian sisters and other famous faces doing what they can to capture a part of the growing prepaid market.
“The market for prepaid debit cards and payroll card products continues to grow at lightening speed, with new products racing to compete with mainstream consumer services like checking accounts,” said Madeline Aufseeser, senior analyst with Aite Group.
Some major banking players, such as American Express with its Bluebird offering and JPMorgan’s Liquid platform, have entered the prepaid sphere over the last year, lending more credence to the industry in the eyes of some. But while financial giants leverage their size and assets to gain market, some smaller players are trying some unique strategies to appeal to subsets of the population.
BillMyParents Inc., a company that presents itself as a prepaid alternative that can help parents control and keep track of their child’s spending, is one such alternative. They nabbed Bieber to be the spokesman for their product, offering him royalties for every account opened, monthly incentive compensation and the option to buy two million share of the company’s stock in return for a promotional campaign.
“We’re not trying to boil the ocean. We’re very focused on our demographic and think we have a message and a product design that is unique,” said Michael McCoy, BillMyParents’ CEO.
McCoy insists the company isn’t “dumbing down” the card or adding fees and compensating by adding the pop star’s name. Instead, it’s simply using his fame as a way to target a specific demographic.
That’s an important distinction to make in wake of the failed “Kardashian Kard,” a prepaid card that was introduced and cancelled in 2010. Kim, Kourtney and Khloe Kardashian rolled out a card with an exorbitant $59.95 fee for six months of use, plus a $1.50 fee for ATM withdrawal fee and penalties for card denials.
Considering the average monthly prepaid fee of around $5, it should come as little surprise that the Kardashian’s well-deserved fame was alone unable to carry the prepaid card to success.
“There’s nothing glamorous about a prepaid card that comes with a bunch of hidden fees and other gotchas,” said Suzanne Martindale, a policy associate for Consumers Union at the time of the card’s demise.
Other celebrities such as Suze Oreman and Russell Simmons have their own prepaid brands as well, seeking to take advantage of an industry estimated to be worth as much as $168 billion by 2016.
To read about more the merger between the prepaid industry and celebrity star power, read the full Bloomberg story here.