About a year has passed since TSYS first announced plans to acquire NetSpend. Now in TSYS’s ownership, the prepaid card provider’s main challenge has remained steady: re-educating consumers so they understand there are electronic-payment alternatives to traditional banking.
In a recent podcast interview with Karen Webster, CEO of Market Platform Dynamics, NetSpend President Chuck Harris described the company’s strategy and how he sees trends playing out in the industry. And he sees the prepaid market as one that is growing, though fragmented.
With NetSpend’s focus on prepaid as a banking alternative, its key challenges include reaching out to consumers and getting them to try something new, perhaps foreign to them, Harris said.
(jump to: 2:33)“And you know, it’s a very hard behavior to change,” he said. “We’ve done it really by trying to find multiple routes to that consumer.”
Multiple consumer routes
Those routes include alternative financial-service companies, check cashers, a retail channel, and through employers. Also propelling interest in prepaid are government efforts to electronify payments traditionally handled via checks, including most recently the Affordable Healthcare Act. The immigration bill topic also is likely to heat up with the upcoming election, with up to 20 million new consumers potentially entering into the financial system, Harris noted.
(jump to: 4:05)“We’ve laid some good foundation, and now you’ve got some real exciting sort of catalysts that are on the horizon that serve as a loaded spring, if you will, that could really help drive growth on a much higher level,” he said.
Cash and mobile similarities
Folks’ payment preferences are shaped by a complex set of cultural and economic issues. Interestingly, use of cash and mobile devices share some similarities, Harris said, noting mobile also provides more consumers access to a digital economy. (jump to: 6:55) “I think there’s a lot of ways mobile can drive growth in our category, he said.”
Mobile represents a new way to manage money, and consumers may use the devices to access their money via text alerts or apps that might give them greater access control. And access is essentially the tangibility that you might get with cash, Harris said.
In terms of where prepaid category needs to go for innovation, Harris noted that everything must get easier to use, across the board.
(jump to: 9:50) “From a NetSpend perspective, we think we’ve built a pretty feature-rich product that’s not by any means done,” he said. “But we’re not spending as much time thinking about what are the next four or five products we’re adding to the platform. There’s one or two or three to be thinking about, but really, it’s, how do we make the whole experience easier?”
Asked what having TSYS as a parent has meant to NetSpend, Harris noted that TSYS has taken a fairly light hand in how it has handled the integration.
(jump to: 12:30) “They’ve allowed us to retain the brand, encouraged us to build a brand, frankly,” he said “They’ve really set it up for us to sort of take what we think are sort of best-in-class services that TSYS might offer to our business.”
To learn more about NetSpend and trends Harris sees driving the prepaid market, listen to the full podcast by clicking below.
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Chuck Harris, President, NetSpend
Charles has served as NetSpend’s president since July 2010. He previously was the general manager of the payment solutions division of Intuit Inc., and he earlier served in multiple positions for Electronic Clearing House Inc., including as president and CEO, president and chief operating officer and as a director.