Unlocking the Virtual Prepaid Card Opportunity

Money today is different than it was five years ago.

It’s more nimble, secure, online and democratized.

That’s why PYMNTS sat down with Chris Winter, managing director and head of APAC at Discover® Global Network, and Suresh Rajagopalan, CEO at Wibmo, a PayU company, to discuss the changes — and opportunities — today’s increasingly online economy is bringing to the payments space.

“Over the last couple of years, what we’ve seen is an acceleration of the digitization of payments … and that digitalization has reinvigorated the [prepaid card] opportunity,” Winter said.

This transformation has been fueled by the expansion of eCommerce, contactless payments and the rise of digital wallets, making prepaid products more viable, secure and cost-effective than ever before, he said.

Particularly in the Asia-Pacific (APAC) region, these developments have positioned prepaid virtual cards at the forefront of the payment industry, a fact which Rajagopalan noted hinges on three aspects: speed to issuance and use; frictionless interoperability; and the end-to-end security of prepaid payment vehicles.

“And this is a global trend, not just APAC,” Rajagopalan said. “Everything is being virtualized and driven by digital.”

After all, consumers’ lives are growing more digital by the day, and this shift is translating into new behavioral expectations around the payments occasion.

Digitizing Payments Can Be Powerful

Prepaid virtual cards can be deployed in a widespread manner as well as surgically, making them an attractive option across use cases and segments.

But that doesn’t mean they come absent any hiccups.

“The regulatory requirements on a prepaid card are very stringent,” explained Rajagopalan, noting “huge scrutiny” in terms of know your customer (KYC) and anti-money laundering (AML) controls.

FinTech startups may not be prepared to meet the level of governance controls needed to scale a prepaid solution.

“Additionally, the cost of FinTechs acquiring these issuances keeps going up because of the competitive, fragmented nature of the space,” Rajagopalan said.

Still, fraud, security and cyber threat risks, as well as compounding customer acquisition costs, have been embedded within the payments space since its inception.

And they haven’t ground things to a halt just yet.

Winter explained that providers like Discover can help FinTechs work within payment schemes by providing security around “the back-end settlement, the movement of funds” while also supporting the ability to “settle in multiple different currencies, sell products in different currencies, and settle cross-border across the region and the world.”

“That’s why Discover and Wibmo have announced a partnership to unlock the benefits of virtual cards in a secure — yet agile — way, enabling FinTech eMoney issuers in the APAC region to leverage an innovative prepaid processing platform,” Winter said.

“It’s a good combination where we bring consumer focus, agility and the software layer, and then use the secure rails of Discover,” Rajagopalan added.

Unlocking the Potential of Prepaid Virtual Cards

In the small- to medium-sized business (SMB) segment, prepaid virtual cards can streamline supplier payments, simplifying fund flows and providing better liquidity management. Additionally, prepaid cards offer enhanced control for travel expense management and international payments, ensuring efficient tracking and reducing the need for traditional banking processes.

“The virtual prepaid trend is within very specialized, narrow verticals,” Winter said. “A lot of these programs won’t be hundreds of thousands or millions of prepaid cards or prepaid products.”

Rajagopalan explained that he sees “corporate spend as the low-hanging fruit … There are plenty of opportunities to manage budgets, employee spend, travel budget and more.”

“We have to address a very specific niche market where we will leave a mark,” he said.

Winter added that the B2B space is another area that is ripe for the special blend of utility and convenience that prepaid virtual cards bring — particularly commercial payments.

“It creates a closed-loop environment for the supplier network to view and see the old fund flow and access a simplified back-end infrastructure without burdening the back-end infrastructure of a bank,” he said.

“The standardization that Discover brings in terms of providing the same experience across secure rails in over 30 markets, and providing interoperability, is important,” Rajagopalan said.

Other opportunities include payroll prepaid cards that address unbanked populations.

Providing seamless, secure and efficient payment experiences for various industries and populations should be the goal of all payment innovations, including the reinvention of prepaid cards across a digital ecosystem, Winter and Rajagopalan said.