Prepaid Tips for 2012: Why Fees Aren’t Always the Answer

More from the “Tips for 2012” Series

1. Know your customer: Now more than ever, it’s important to understand your customer and what makes them tick. We all know the market is fragmented, but many companies are getting more sophisticated at understanding and targeting unique segments through social media, mobile applications and online marketing tools and techniques. If you don’t exactly who your customers are, what makes them tick and how to talk to them, you’d better get going.

2. Dig into the costs: As we all know, prepaid has thin margins. The nooks and crannies count. This is the year to thoroughly understand everything that drives your costs. What is the root cause? How can you adjust your product marketing, your servicing, your vendor agreements to optimize and streamline? If a solution isn’t optimal, change it.

3. Stay on top of regulations: Make sure you thoroughly understand the implications of Dodd-Frank and other regulatory issues – Don’t assume that what your competitor does applies to you. Get expert advice, ideally multiple sources. And remember, necessity is the mother of invention.

4. Find your niche, even though it may not be “follow the leader”: What are your unique assets? How can you apply them to best your competitor?

5. Figuring out when “prepaid” isn’t prepaid: We use the term “prepaid” to describe how funds are loaded on the account in advance. There are many times consumers don’t care and are frankly put off by this term. It’s an industry term, not a consumer term. Understand your marketing message and if it’s not needed, don’t use it.

6. Mobile, mobile, mobile: This medium is providing a huge platform for prepaid growth. It applies to both ends of the demographic spectrum and gives us a way to communicate in ways a plastic card just can’t accommodate. How does your strategy incorporate mobile? Does it embrace it? Have you decided how to think differently about your product or services in a mobile environment? If not, the time is now.

7. Focus: Bright shiny objects can send an organization in too many directions. They can be investment and resource drains. Hone your expertise, gain momentum, and then expand in a thoughtful way.

8. Fees aren’t necessarily the answer: It is critically important to understand which fees matter and which fees don’t. Cost structures to support prepaid products vary significantly and it is expected that there are fees for services provided. However, these expectations vary widely among demographics and mediums delivered. Aligning methods of delivery to your customer to simultaneously manage your costs and associated revenues is critical.

9. Partner wisely: Pick the best partner to help get new products, features, and solutions off the ground. The marketplace is changing quickly – use other’s expertise to help build creative solutions and deliver value. Use your own time and energy where your business excels – not replicating what exists.

10. Test, learn and scrap when needed: Don’t hang on to underperforming solutions. They are resource and investment hogs. Employ a rapid test environment wherever possible.

11. Protect your investment: If you have developed a unique approach, products, or solution, investigate patent rights. Capitalize on your efforts.

12. Government solutions: Solutions for governmental programs and distributions continue to grow. Care needs to be taken before approaching this segment, but for those that understand the complexities and have the proper distribution channel, it can be worth it. 

Gloria K. Colgan is a Managing Director at Market Platform Dynamics and a leader in emerging payments and financial services.  Prior to her affiliation with MPD, Gloria served as Senior Vice President for Discover Network, and as a member of the Discover Financial Services Management Committee.

While at Discover, Gloria established and grew the Marketing organization, including product development and management, branding and communications, plus pricing and analytics, enabling Discover to position themselves as a viable network alternative in the marketplace.  Among her accomplishments include the development of Discover’s market-leading solutions for emerging payments, including mobile, contactless/EMV, and prepaid products.

Prior to joining Discover, Gloria was the Senior Vice President of the Commercial Card Product Group for JPMorgan Chase. There she was responsible for development and management of the purchasing, travel and entertainment, fleet, and stored value card programs. In addition, she managed all training and external communications functions for the commercial card organization.

Gloria also has depth in private label and co-brand marketing and product management.  She was a marketing leader with Sears Credit Services managing consumer affinity card programs, as well as their commercial credit card products. She began her career in consulting, working for McKinsey and Company, advising financial services companies on issues of marketing strategy, organizational structure, and re-engineering opportunities.

Gloria earned her M.B.A. in Finance from The University of Chicago Booth School of Business and her B.S. in Business from Bradley University. She lives in the Chicago area with her husband and son.

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