i2c CEO: “Prepaid Products Target the Wrong Customers”

What's Next In Payments®
6:49 PM EDT July 16th, 2013

The financial industry welcomed prepaid cards into the family by the end of the 1990s and early 2000s. Overzealous stakeholders jumped to take part in the prepaid movement, but forgot to look before they leaped.

As a result of the craze, prepaid card business models lacked the proper foundation needed to sustain success and grasp the market’s potential.

That’s how Amir Wain, CEO at i2c, believes the prepaid industry has reached its current point.

According to Wain, many players in the prepaid industry fall apart, and others merely flutter at the surface of their full potential. Various payment products have reached maturity, but the prepaid industry is fighting to build more effective business strategies and operations. In Wain’s view, inadequate management is often to blame for prepaid’s failure, but this is not because of a lack of manager skill. Instead it’s due to a lack of processing technology and secure infrastructure.

A white paper released by i2c Inc attempts to outline common program management obstacles that challenge the prepaid industry. Market Platform Dynamics CEO Karen Webster spoke with Wain to hone in on how prepaid companies can remedy their business models, maximize potential and find the right tools to do so.

Webster dived right into frequently found program management problems and asked Wain how the process should be corrected.

“There are two primary categories, which is first the actual definition of the business model, and second is the execution,” Wain responded.

“There has been a limited ability to execute on this innovation engine within the payments space. When you think about credit and debit, there are very mature applications. Over the years, the industry has built systems that execute them very well in a secure and reliable fashion,” he further explained.

“But then you throw innovation, in prepaid—or lets call it ‘stored value’—and now when I try to go back and use a system that has been designed to keep doing one thing well, this is when I run into problems.”

According to Wain, when a company attempts to manage a prepaid program with the same tools and approach as a credit or debit card program, they can run into trouble. However, differences between prepaid and traditional financial products are not limited to the processing systems.

Instead, Wain pointed to a “philosophical change” that needs to take place in the industry as well.

“I completely disagree with thinking that prepaid is for those that are not being served by an existing product.”

Prepaid companies can increase customer value without having to slap on additional fees. Wain explained customers who aren’t the target consumer for credit and debit card programs don’t want to feel like chopped liver.

Speaking for the consumer he stated, “I do not want to be thought of as a reject or a second, lower class product. As a program manager, thinking about my product, I’ve got to set my premise around “prepaid by choice.” I’m not looking to sign you up just because you can’t get the other product.”

To hear more Webster and Wain on prepaid’s problems and solutions, listen to the full podcast below.

   

*If you have trouble with the audio player above, click here.

And to read more about i2c’s take on prepaid, download their complete white paper here.


Amir Wain

Chief Executive Officer

Amir Wain is a pioneer in the prepaid card industry. He founded Innovative Private Limited, a software-development firm, in 1987 and led the development of the transaction processing platform FastCash. Propelled by the success of Innovative and expanding market opportunities, Wain founded i2c Inc. in 2001 and with his team, launched My Card Place (MCP), i2c’s customizable, feature-rich card processing platform. Under Wain, i2c has introduced a number of prepaid industry firsts, including its Campaign Manager, Giftogram and i-Coupons products. He introduced the term “Prepaid2.0” to describe the change in mindset that embraces previously underserved cardholders as valuable customers and leads to comprehensive and flexible lifestyle products that incorporate value-added services and foster customer loyalty. At i2c, Wain continues to develop his vision with strategies to meet the needs of the evolving prepaid marketplace.

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