Prepaid’s Perfect Storm: Shifting Demographics

What do you get when you combine a recession, government regulations and a turbulent environment?

According to Beth Horowitz, senior vice president, global marketing solutions for Discover, you get the perfect recipe for prepaid innovation.

Market Platform Dynamics CEO Karen Webster spoke with Horowitz about Discover’s prepaid offerings, prepaid’s shifting demographics and why new solutions need to cater to the populations they serve.

According to Horowitz, prepaid solutions are no longer popular just with the un- or underbanked solutions they’ve been linked to in the past. Instead, the economy, regulatory environment and consumer behavior have led to a shift in prepaid demographic that’s seen its popularity increase dramatically with younger generations.

“It’s not the typical profile or the perception that we in the industry have been looking at with prepaid for the last decade or so,” Horowitz noted. “According to Aite, 45 percent of the population that has opted out of traditional banking is the Millennials. That number goes to 27 percent for Gen X’s and 28 percent of Baby Boomers. That’s a lot of people who are opting out and choosing new forms of payments,” she said.

“Millennials are 80 million strong. They’re a bit under-employed right now. They’re either continuing with their education or relocating for jobs, so they may choose to have a financial services product that can move with them.”

Asked by Webster how Discover uses this knowledge to create new prepaid solutions, Horowitz emphasized that it is essentially to create innovative solutions that address specific needs and lifestyles.

“We need to think about it in a new way, partner with companies that are doing things that are truly unique and never forget that the consumer is the one driving this. We all have to adapt to how they are using their cards,” Horowitz said.

“You know, in the payments industry, we like to say, ‘I’ve got this technology. I’ve got this widget. I can do this. Now, consumer, go use it.’ And I think that’s the wrong way to innovate.

We like to innovate by saying, ‘Ok, consumer, tell me how you live your life. How do you use thee products?’ And we’re going to innovate for you.”

To hear more Webster and Horowitz on prepaid, listen to the full podcast below.

   

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

To read a transcript of the audio conversation, click here.


Beth Horowitz

Senior Vice President, Global Marketing Solutions for Discover Network

Beth R. Horowitz is Senior Vice President of Marketing and Merchant Relations for Discover Network, a business unit of Discover Financial Services. In this capacity, Ms. Horowitz is responsible for leading the client marketing organization, including brand integration, communication services, product management and global pricing, as well as overseeing the direct relationships Discover has with key merchants in the U.S. She also leads emerging product initiatives such as EMV, contactless, mobile and prepaid.

Ms. Horowitz joined Discover in 2006 as Vice President of Product Management where she served in a leadership role to drive prioritization for Discover Network functional capabilities and to seed emerging product innovation.

Prior to joining Discover in 2006, Ms. Horowitz was Senior Vice President, Advanced Payments Solutions for MasterCard International. In this role she was responsible for the Innovation and Planning group that managed product marketing, planning and R&D efforts, and led the company-wide innovation practice to drive new product development worldwide.

Before joining MasterCard in 1989, Beth held positions at Shearson Lehman Hutton, Development Dimensions International and Working Woman Magazine.

Beth earned her Master of Business Administration from Pace University and holds a Bachelor of Arts degree from the State University of New York. She is a member of the American Management Association, W.net, and International Who’s Who and serves on the board of Lambs Farm, a non-profit organization serving adults with developmental disabilities.