Banks get into cards paid first Chase prepaid services called 'game changer' Big banks are entering the business of prepaid debit cards, as more Americans turn to reloadable plastic as a handy alternative to checking accounts, check-cashing stores and other financial options. Giant JPMorgan Chase is especially aggressive. In late June, it launched Liquid, a card that lets users load and withdraw money at Chase's extensive branch and ATM network at no charge. Some analysts call Liquid a "game changer," because most prepaid cards charge for loading, withdrawal and other services that Chase is offering free at its network.Wells Fargo also began offering a prepaid card in March, Regions Bank has one, and other large and regional banks are preparing or considering a launch. The banks' motivation: to tap the booming prepaid market and obtain new sources of revenue to offset big losses from lower fees collected on traditional debit cards used at stores, analysts said. South Florida is key to the prepaid card push, because the area hosts a wider range of banks and a larger share of residents without banking accounts than many other U.S. areas. About 8.4 percent of South Florida households were without a checking or savings account, compared with 7 percent "unbanked" statewide and 7.7 percent nationwide, according to a census study based on 2009 data. Chase sees special opportunity for Liquid in Florida because of its extensive network of branches and ATMs in the state, said Jon Wilk, head of product and marketing for Chase consumer banking. It has 42 branches in Broward County, 44 in Palm Beach Countyand 309 statewide, government data shows. Cardholders who use Liquid can leverage Chase outlets to cash checks, load money and withdraw cash for free, saving handsomely compared to other cards, Wilk said. In contrast, Wells Fargo's prepaid card charges users $5 to load money on their card, unless they have a Wells Fargo credit card. It charges $3 to withdraw cash at a teller, the bank's website said. That explains why comparison website CardHub.com ranks Chase Liquid the best prepaid card for consumers seeking an alternative to check-cashing stores. Liquid cardholders pay nothing to cash checks and load cards at Chase outlets, services that can cost $5 or more at check-cashing stores. Still, Liquid has its limits. The card may not lure many "unbanked" customers in low-income areas where Chase has few outlets, said analyst Tim Sloane, of Mercator Advisory Group in Boston. "Liquid will appeal more to the up-market, including existing Chase customers who want a prepaid card for their child's allowance or for budgeting," said Sloane, vice president of Mercator's prepaid advisory services. Banks are tapping a booming market they helped create. Many Americans are turning to prepaid cards to flee rising fees on bank accounts. For instance, Chase now charges $12 a month for basic checking, unless consumers qualify for waivers based on direct deposit or minimum balances. Its monthly fee for the Chase Liquid prepaid card runs less than half that rate: $4.95. Last year, consumers loaded about $57 billion onto prepaid financial products nationwide, up from $41 billion a year earlier. The total should jump to $167 billion in 2014, researcher Mercator forecasts. So far, prepaid cards are largely unregulated. But the newU.S. Consumer Financial Protection Bureauis developing rules to standardize fees and make terms for the cards more transparent for users. dhemlock@tribune.com, 305-810-5009

Banks get into cards paid first

Chase prepaid services called 'game changer'

Big banks are entering the business of prepaid debit cards, as more Americans turn to reloadable plastic as a handy alternative to checking accounts, check-cashing stores and other financial options.

Giant JPMorgan Chase is especially aggressive. In late June, it launched Liquid, a card that lets users load and withdraw money at Chase's extensive branch and ATM network at no charge.

Some analysts call Liquid a "game changer," because most prepaid cards charge for loading, withdrawal and other services that Chase is offering free at its network.Wells Fargo also began offering a prepaid card in March, Regions Bank has one, and other large and regional banks are preparing or considering a launch.

The banks' motivation: to tap the booming prepaid market and obtain new sources of revenue to offset big losses from lower fees collected on traditional debit cards used at stores, analysts said.

South Florida is key to the prepaid card push, because the area hosts a wider range of banks and a larger share of residents without banking accounts than many other U.S. areas. About 8.4 percent of South Florida households were without a checking or savings account, compared with 7 percent "unbanked" statewide and 7.7 percent nationwide, according to a census study based on 2009 data.

Chase sees special opportunity for Liquid in Florida because of its extensive network of branches and ATMs in the state, said Jon Wilk, head of product and marketing for Chase consumer banking. It has 42 branches in Broward County, 44 in Palm Beach Countyand 309 statewide, government data shows.

Cardholders who use Liquid can leverage Chase outlets to cash checks, load money and withdraw cash for free, saving handsomely compared to other cards, Wilk said.

In contrast, Wells Fargo's prepaid card charges users $5 to load money on their card, unless they have a Wells Fargo credit card. It charges $3 to withdraw cash at a teller, the bank's website said.

That explains why comparison website CardHub.com ranks Chase Liquid the best prepaid card for consumers seeking an alternative to check-cashing stores. Liquid cardholders pay nothing to cash checks and load cards at Chase outlets, services that can cost $5 or more at check-cashing stores.

Still, Liquid has its limits. The card may not lure many "unbanked" customers in low-income areas where Chase has few outlets, said analyst Tim Sloane, of Mercator Advisory Group in Boston.

"Liquid will appeal more to the up-market, including existing Chase customers who want a prepaid card for their child's allowance or for budgeting," said Sloane, vice president of Mercator's prepaid advisory services.

Banks are tapping a booming market they helped create. Many Americans are turning to prepaid cards to flee rising fees on bank accounts. For instance, Chase now charges $12 a month for basic checking, unless consumers qualify for waivers based on direct deposit or minimum balances. Its monthly fee for the Chase Liquid prepaid card runs less than half that rate: $4.95.

Last year, consumers loaded about $57 billion onto prepaid financial products nationwide, up from $41 billion a year earlier. The total should jump to $167 billion in 2014, researcher Mercator forecasts.

So far, prepaid cards are largely unregulated. But the newU.S. Consumer Financial Protection Bureauis developing rules to standardize fees and make terms for the cards more transparent for users.

dhemlock@tribune.com,  305-810-5009

Western Union prepaid card launched in Manila

Western Union prepaid card launched in Manila

By: Doris C. Dumlao
Philippine Daily Inquirer

1:19 am | Wednesday, July 25th, 2012

MANILA, Philippines—Global payments giants Western Union and Visa teamed up with Aboitiz-led Union Bank of the Philippines to roll out a prepaid card meant to serve consumers that are otherwise not served by the traditional banking system.

The Western Union Gold Prepaid Card is seen providing an alternative to carrying cash, allowing Filipinos to store and access money anytime, and widening options for managing cash remittances from abroad, officials announced in a briefing Tuesday.

The Philippines is the first country in Asia-Pacific where the Western Union prepaid card is launched. The stored value card is being used in the United States, United Kingdom, Germany, Austria, Argentina, Peru, Panama and El Salvador.

This card seeks to bring the “unbanked” Filipinos into the financial mainstream in a nation where the use of banking services by people over 15 years old was only at 27 percent.

U.S. Bank buys part of Chattanooga-based TransCard

Timesfreepress.com

Timesfreepress.com

home » business » tn valley » u.s. bank buys part ...

published Thursday, July 26th, 2012

U.S. Bank buys part of Chattanooga-based TransCard

Chattanooga-based TransCard has sold a part of its business to U.S. Bank for an undisclosed sum in a deal that will add dozens of jobs to both companies.

TransCard plans to use the sale proceeds to expand its prepaid card division in Chattanooga, where it now will focus all its efforts, said Craig Fuller, CEO of TransCard.

The company operates the prepaid card services for more than 65 banks across the country, a footprint of almost 4,200 branches. That's up from one bank customer with two branches when the company was founded in 2010.

TransCard already has hired 15 out of a planned 20 new workers in Chattanooga, while U.S. Bank will add 45 jobs of its own as a result of the deal.

U.S. Bank bought TransCard's fuel card division, which uses technology designed to help truck drivers pay negotiated prices at fuel stops. The technology originally was developed by Chattanooga-based trucking company U.S. Xpress, which is led by Fuller's father, Max Fuller.

"U.S. Bank wanted to be in the business, they thought it was a gap in their offerings, so they made an investment in this business," Fuller said.

U.S. Bank will offer its new service to about 14,000 transportation companies, according to a news release.

Fuller's company already is pushing off in another direction with its newest prepaid solution, which axes per-use fees in favor of a flat rate.

If TransCard's pilot program goes well on what its calling an "unlimited access card," Fuller hopes to pick up customers in the Hispanic community.

Hispanics, who as a group are difficult for banks to reach, may be drawn in by the fee-free structure, he said.

"This is modeled after the prepaid wireless cellular industry," Fuller said. "We're helping banks to add completely new customers and new types of customers."

The new arrangement between U.S. Bank and TransCard uses a "duel wallet" solution, said Ramel Lindsay, group product and program manager for U.S. Bank.

By using one single card or a cardless solution, computers automatically will determine whether a purchase falls under the corporate fuel card account or whether to charge it to a worker's personal prepaid account.

Filling up a big rig with diesel automatically will charge a company account, while a bag of chips will come out of a driver's personal cash.

"At the time of use, it will look and feel just like any standard debit card," Lindsay said.

Prepaid card market in BRIC countries to see healthy growth by 2016

Prepaid card market in BRIC countries to see healthy growth by 2016: report

BBR Staff WriterPublished 04 July 2012

Prepaid card market in the BRIC countries is expected to see healthy growth over the next four years, according to a BRICdata report.

During the review period, China was the largest prepaid cards market among the BRIC countries, followed by Russia, India and Brazil.

In 2011, the Chinese prepaid cards market valued over $160bn while Russian prepaid card market registered a CAGR of 61.26% during the review period.

Over the forecast period, India's prepaid card market is expected to increase at a CAGR of 39.68%.

According to Associacao Brasileira das Empresas de Cartoes de Credito e Servicos (ABECS), the total number of credit cards in Brazil increased by 13% during 2011, to reach over 170 million at the end of the year, while the number of debit cards increased by 7%.

Indian prepaid cards market is highly consolidated among three companies namely Axis Bank, ICICI Bank and Itz Cash Card which accounted for a share of 73% of the market value in 2011.

According to the report, Chinese retailers and Chinese public transport corporations are the leading providers of prepaid cards.

The full report 'Market Opportunities and Emerging Trends in the Prepaid Card Market in BRIC Countries' is available from BRICdata.

Prepaid debit cards growing business for students, ‘unbankable’

Prepaid debit cards growing business for students, ‘unbankable’

BY ANNIE WILKINSON

SPECIAL TO THE MIAMI HERALD

One in four U.S. households doesn’t use a traditional bank, and financial institutions now classify an alarming percentage of the population as “unbankable.” Many consumers are unable to open a checking account, which means they don’t qualify for a credit card or debit card. This has led to a rise in pre-paid debit cards, in which consumers deposit funds that can be spent anywhere Visa and MasterCard are accepted, without risk to issuing banks or credit unions. These cards are something of a necessary evil as they enable the unbankable to use everyday services that require a credit card, but the fees can be high.

It’s easy to overlook the privileges of a checking account and credit card, but with consumer commerce fast transitioning towards a cash-less culture, functioning in today’s society without plastic is near impossible. Without a debit/credit card, one can’t make a hotel reservation, rent a car, book a flight or shop safely online.

Today, more than 7 million consumers use prepaid cards, including nearly one in five Gen Y and countless “underbanked” consumers. In 2009, $28.6 billion was loaded onto prepaid cards, an amount expected to climb to $201.9 billion by next year.

Financial institutions implemented prepaid cards as a last resort for consumers who don’t qualify for traditional bank accounts, but many financially healthy customers like the card for an unexpected benefit: sending money to minors or college students. Parents load spending/emergency money onto the card and can track how much their child spends and where. Many find the cards appealing for college students because cardholders can’t overdraw the account, and without a credit line, users can’t cause long-lasting damage to a credit score.

Despite its high demand, many financial advisors view the product geared at underbanked consumers as predatory; mostly because the unregulated cards can charge high fees. Also, most cards don’t report back to a credit bureau and won’t improve a credit score.

Consumers can limit or avoid high fees with some pre-planning and reviewing card disclosures. Look for a prepaid card that doesn’t charge each time you add funds, or be sure to add funds through the card’s approved vendors. Also, consider a card that waives monthly fees for setting up direct monthly deposits or for carrying a minimum balance. Some cards reduce fees if the entire amount loaded on the card is spent before each monthly statement date. For example, if a cardholder loads $300 onto a prepaid card, he or she must spend all $300 before the end of the month to avoid a fee. The key is to review disclosures because every card is different.

Prepaid cards provide a necessary service to unbankable consumers and a great tool for parents, as long as cardholders know the rules.

Annie Wilkinson is executive vice president of Dade County Federal Credit Union; www.dcfcu.org.http://www.miamiherald.com/2012/08/12/2948596/prepaid-debit-cards-growing-business.htmlhttp://www.miamiherald.com/

http://www.zdnet.com/blog/btl/e-commerce-driving-up-prepaid-card-use-report-says/73346

E-commerce driving up prepaid card use, report says

Consumers are turning more to prepaid cards to pay bills and make online purchases, according to a new report. Prepaid cards are on the rise especially among members of Generation Y and consumers without easy access to banks, according to a new report from Javelin Strategy & Research.
Some of the reasons being attributed to the recent growth of prepaid card use is that this method offers financial independence and help to establish credit.
E-commerce, in particular, is driving up prepaid card usage as consumers have started to use them more to pay bills and make online purchases.
Additionally, Javelin researchers compare prepaid cards to cash, citing that the latter is generally “unreachable” when shopping online. For “underbanked” customers, or those who don’t have access to payment (credit or debit) cards or checking accounts, prepaid cards fill a void.
Otherwise, these consumers have to rely on other options, such as eBillme, that aren’t necessarily provided by all small and major retailers.
There’s also another incentive to prepaid cards that rings similar to emerging mobile commerce solutions: it’s an easy way to track loyalty points and memberships, among other purchasing statistics among consumers.
Javelin researchers cited the PayPal Prepaid MasterCard, which can be used anywhere MasterCard is accepted, making it a very versatile option. Furthermore, this card offers paypack rewards when linked to a PayPal account.
Right now, prepaid cards currently only account for 8 percent of the total online payments volume. Yet prepaid cards’ dollar volume is predicted to increase from $21 billion in 2011 to $32 billion in 2016 as analysts expect that the underbanked population is actually going to grow.

http://www.huffingtonpost.com/2012/04/11/prepaid-cards-javelin_n_1416181.html

 

 

Prepaid Cards Rise In Popularity As More Americans Are Shut Out From Traditional Banks 

Increasingly shut out of traditional bank accounts, more Americans are turning to prepaid debit cards often notorious for their high fees.
Prepaid cards run the gamut: some are re-loadable plastic cards that can be used for the direct deposit of paychecks and function almost like real checking accounts, while others are single-use cards more akin to gift certificates.

Use of prepaid cards among all Americans climbed to 13 percent in 2011 from 11 percent in 2010, according to a new report from Javelin Strategy & Research, a market research group. The number of people with traditional checking accounts, savings accounts, credit or debit cards declined by 11 percentage points since 2010, the report said.

"The economy and changes in regulations have really put pressure on checking accounts," said the paper's author Beth Robertson, the director of payments research at Javelin. "It has been changing the nature of those products to a certain extent and restricting ownership."
The youngest consumers have felt the brunt of this. New rules under the CARD Act, which took effect in 2010, set an age limit on credit cards, unless the card holder is self-supporting or has a cosigner. Free checking accounts -- a typical option for a first-time account holders -- have also become more rare in the last few years.
The new restrictions have pushed teenagers and twenty-somethings to seek alternative solutions, that still allow them to shop online, electronically pay bills, monitor an online account, link a "savings" account and even get rewards points, said Robertson. One in six Gen-Y Americans -- those who are roughly 30 and under -- currently have a prepaid card, according to the report.

For parents who give money to their kids but want to monitor their spending, prepaid cards have also become an increasingly popular alternative to cash or credit cards. "Parents can fund and monitor spending, and set limits on certain kinds of spending, like blocking certain merchants," Robertson said.

Other prepaid card users include Americans who have been off-ramped from retail banks -- 18 percent of people who have no bank account say they have a prepaid card instead, according to the Javelin report. Today, 12 percent of people in the United States have no checking account, compared to only 8 percent in 2010, for some of the same reasons young people don't have them: It's getting harder to qualify for one and there are fewer free checking accounts to be found.
The growing prepaid industry is largely unregulated -- and for now, Robertson said, it is largely self-policed. Several years ago, when prepaid cards were first becoming popular, some cards had high and hidden fees. But that has changed somewhat in the last year, as card makers have added more transparency to pricing, said Robertson. Traditional banks and card-makers, like USAA and American Express, are increasingly offering prepaid cards as well.