Hip-hop entrepreneur Russell Simmons rolled out RushCard about a decade ago; a year ago the pre-paid card product was swarmed by bad press after a technical glitch left customers unable to access their funds. Now RushCard is on the comeback tour — a walk back paved with options not generally available on pre-paid cards.
Those new features are the first big changes RushCard has announced since reports began emerging last fall that a glitch in the system had left customers entirely locked out of their accounts. The situation was created by a change in card processors on RushCard’s part — the results were customers unable to pay bills on time, a publicity fiasco complete with a battery of angry Facebook posts and mean Tweets and a $19 million dollar settlement in the eventual lawsuit over the whole ordeal.
Ron Hynes — a former prepaid-card executive at MasterCard Inc. — was named RushCard’s chief executive last month and is the moving force behind the coming changes to the platform.
“We’re thriving and finally we’re able to get back to the business of bringing new products and services to market that benefit our customer base,” Hynes said in an interview. He noted that the new card features were underway before he got to the company, but he sped up their introduction.
New features will include a revamped mobile phone application that lets customers temporarily freeze their accounts if they misplace their cards; it will also allow customers to open the app by authenticating it with a fingerprint for additional security. While these are not new features for cards in general, their inclusion on a prepaid platform is somewhat rare. Prepaid cards are mostly aimed at lower-income consumers without bank accounts — though in recent years there have been additional uses for them as gifts or spending control tools given by parents to college students.
“They are aspirational and will empower our customers by giving them many of the same features (and more) that they could receive at traditional banks and with credit cards,” Simmons said in a statement.
Prepaid cards have changed much since Simmons and RushCard first entered the fray a decade ago — regulations have changed and market pressures have in most cases brought down historically high fees and removed opacity. The industry is now awaiting final rules from the CFPB that are expected to set standards for fees disclosure and a host of other issues.
“The industry is in a state of high anxiety about these rules because no one knows what is in them,” said Ben Jackson, director of the prepaid card advisory service at Mercator Advisory Group.