Rush Card’s Strategy: Lower Fees, Add Users, Keep Them Happy
There are a couple of reasons why payments players ought to pay attention to UniRush LLC, the company behind the Prepaid Visa Rush Card.
Its founder — music mogul Russell Simmons — is the obvious one, and seems to have been the main draw for the news outlets that have covered the company thus far (60 Minutes, CNN, NPR et al). No doubt, it is interesting to hear about how Simmons shirked the prepaid phone card business for something that’s turned out to be vastly more sustainable.
But the business itself is even more compelling. Take its growth: CEO Rob Rosenblatt says the number of Rush Cards being used by consumers has doubled over the past two years.
Then consider its revenue strategy. On March 1, Rush Card lowered its monthly fees for direct deposit and non-direct deposit customers through its RushUnlimited plan. A month earlier, the company made all electronic bill paying free, and reduced the fee on card-to-card transfers from $2.95 to $0.99.
In January, the company began offering a Payday Advance service, providing customers access to their wages as many as two days before funds are actually deposited. The associated interest rate: an absolutely usurious zero percent.
“The new pricing plan was very significant for our company,” Rosenblatt acknowledges. He also explains what impact the new approach might have on financials.
Says Rosenblatt, “It may mean exchanging profit for a longer-term relationship.”
There’s no other way to put it really: by reducing fees, Rush Card is betting on expansion and retention. As for why that strategy makes sense, Rosenblatt points to two reasons, the first being Rush Card’s aforementioned growth.
The second: Rush Card the business is really connecting with the Rush Card consumer base. Rush Card users frequently call to check their balances, Rosenblatt says, and rely heavily on the customer service resources provided by the company. There’s also evidence that users see the Rush Card as more than a stored value option, with Rosenblatt calling the ratio of customers that use direct deposit with their cards “extremely high.”
To that end, Rush Card is filling the void first cited by founder Simmons when the company was founded in 2003: the need for a banking option for the nation’s 60 million un- and under-banked. This viewpoint — seeing Rush Card as a banking service, not just a card — helps explain Rush Card’s bet on a close relationship with its customer base.
It also helps explain why Rosenblatt expects Rush Card to continue to grow into the future. When asked about his company’s future, he cites two recent headlines that speak directly to Rush Card’s identity switch. First, he mentions the J.D. Power and Associates study that estimated one of every ten Americans left their bank in 2011. Second, he points to a Bloomberg report that cited JP Morgan Chase as saying 70% of its customers with less than $100,000 in deposits would soon be unprofitable for the bank.
Could these shifting tides in conventional banking be a boon for Rush Card, and for prepaid and stored value in general?