The consumer shopping experience is changing as quickly as smartphones, loyalty apps and access to mobile payments platforms are being put in their hands. As Market Platform Dynamics CEO Karen Webster pointed out in a recent commentary piece, shoppers have also become more thoughtful in their purchasing decisions. And, merchants are responding to this shift by investing in mobile commerce and payments options for their customers.
This migration is happening thanks to the convergence of mobile, loyalty and payments, said i2c’s CEO Amir Wain in an interview with PYMNTS.com, but the infrastructure needed at the physical point-of-sale to completely ignite usage is not yet in place. Prepaid cards, he says, can become the vehicle that will drive mobile payments adoption. And, according to Wain, prepaid cards linked to loyalty initiatives will play an important part in this migration as well.
“Prepaid can handle multiple types of entitlements or stores of value for mobile wallets, and it provides a platform to integrate rewards and digital offers while providing very rich data on consumer behavior,” he explained.
In a podcast from earlier this year, Wain suggested that prepaid products aren’t targeting the right customers . This time around, he touches on the broader implications and opportunities that prepaid presents for the marketplace.
PYMNTS.com: Mobile, loyalty and payments are converging. What role does prepaid play in this trend overall and how can it help with the transition from plastic to mobile payments?
Amir Wain: Prepaid is the enabling technology and convergence platform for mobile payments. I don’t look at prepaid as a financial product; I look at it as an enabling technology. Unlike credit or debit, which have very specific purposes, prepaid does not have a specific purpose and is therefore not bound by the same constraints. Organizations across the globe are using prepaid for so many different things and new applications are being rolled out every year. So in this sense, prepaid is more an enabling technology than a product. And this is precisely why it is the ideal building block for mobile payments. It provides a core enabling technology that is flexible enough to support new products that fuse mobile and loyalty with payments. Prepaid can handle multiple types of entitlements or stores of value for mobile wallets, and it provides a platform to integrate rewards and digital offers while providing very rich data on consumer behavior.
We all know that mobile will play a key role in the future for payments and commerce, and we have known this for many years. Unfortunately, the infrastructure at the point of sale is just not in place to allow widespread acceptance at this point. Coupling a card with mobile can allow consumers to enjoy all of the benefits of mobile payment schemes without running into a payment acceptance issue when trying to buy something. If NFC or QR codes are not supported at the POS, the merchant can always swipe a plastic card or key in the card number. In this way, prepaid solves the chicken and egg dilemma that has stood in the way of mobile payments adoption by providing widespread acceptance while merchants upgrade their POS infrastructure. In many ways, a prepaid card is to a mobile wallet what a debit card is to a checking account. Think about how much more accessible debit cards made our checking accounts. Prepaid cards do the same for mobile wallets today.
Based on your experience what are some of the most innovative and progressive strategies available today for capitalizing on prepaid cards?
Certainly what we just discussed – mobile payments – is a huge opportunity for prepaid. i2c is providing the infrastructure to several start-ups that have plans to make big splashes in this space. But there are other areas too. Remittances is a ripe area. Our clients, Western Union and Boom Financial, are making interesting plays with prepaid on a global basis, and there is certainly much room for growth in the remittance market. Travel and government disbursements are other hot areas, especially outside of the US, and we have been working with a new alliance partner, Visa, to add more innovative features to these products. The ability to transfer money in real-time between multiple currencies or set up multiple spending purses that can be accessed through just one card are a couple examples of these innovations.
What are the key imperatives for banks and financial institutions to be successful in navigating the mobile-centric future of banking and financial services?
First and foremost is to stay focused on the value proposition to the consumer. Many organizations end up focusing too much on adding specific mobile features without giving real thought into what problem it solves or what value the consumer will get out of it. This is an area where I think a lot of organizations – not just banks and financial institutions – can go wrong. I always advocate taking a consumer-centric approach as opposed to a mobile-centric approach when developing a mobile strategy. Second, keep it simple. There are only a small handful of mobile features that consumers actually want and will use, and these tend to be simple things like receiving an SMS alert when their balance falls below a certain threshold. My advice is to understand what the consumers’ top needs are and choose mobile features that fit with those. Lastly, I think it is smart for them to weave new mobile capabilities into their business models to increase Customer Lifetime Value (CLV). As an example, one could increase revenue per card by layering in relevant, customized offers to create additional non-fee-based revenue streams. Similarly, one can leverage the mobile channel to proactively deliver information to consumers in order to reduce contact center costs.
How can banks and FIs create mobile financial services that will result in the highest levels of engagement and retention?
As I mentioned before, so much depends on the consumer and meeting their unique needs. So it is always important to understand what those needs are and create a solution for them, as opposed to simply pushing out new mobile features. We have learned that consumers engage with what is relevant to them, but what is relevant to one may not be relevant to another. The great thing about the mobile channel is that it allows for mass customization. Consumers can make the FI’s mobile offering their own by configuring it exactly how they want or by selecting from a list of predefined personas. Mobile makes it possible for FI’s to give consumers the power to create their own highly personal and customized experiences. Timely and relevant communications are other important aspects of creating sticky relationships and mobile is a fantastic channel to make this happen.
Finally, how can prepaid and mobile come together to produce tangible value for consumers?
I think the combination of the two can go a long ways towards helping combat a big problem facing so many people. I am talking about irresponsible spending, debt and general financial mismanagement. I wrote a blog post about this issue a couple months ago and asked why the financial services industry has largely failed to help consumers with these problems. Prepaid, by its very nature, facilitates more responsible financial management. But prepaid on its own can not help consumers decide if they can afford something or stop them from making an impulsive purchase. This is where mobile comes in. I think there are many opportunities to layer mobile features over a prepaid product to create real value for consumers. An example is a mobile-enabled actionable budgeting feature that allow consumers to set a budget and actually stops or alerts them when they have veered off track. This is just one example; there are so many possibilities.
Amir Wain is a pioneer in the prepaid card industry. He founded Innovative Private Limited, a software-development firm, in 1987 and led the development of the transaction processing platform FastCash. Propelled by the success of Innovative and expanding market opportunities, Wain founded i2c Inc. in 2001 and with his team, launched My Card Place (MCP), i2c’s customizable, feature-rich card processing platform. Under Wain, i2c has introduced a number of prepaid industry firsts, including its Campaign Manager, Giftogram and i-Coupons products. He introduced the term “Prepaid2.0” to describe the change in mindset that embraces previously underserved cardholders as valuable customers and leads to comprehensive and flexible lifestyle products that incorporate value-added services and foster customer loyalty. At i2c, Wain continues to develop his vision with strategies to meet the needs of the evolving prepaid marketplace.