Cash back, rewards, budgeting tools, digital engagement: General-purpose-reloadable (GPR) cards are no longer synonymous with the unbanked and underbanked. In fact, there’s a new term for customers of this rapidly growing prepaid segment: the “self-banked.”
“We’re enabling that individual to become self-banked, as opposed to under- or unbanked,” says Ben Stites, director of business development for NetSpend, Austin, Texas. “They’ve chosen us to be their bank so we want to deliver bank-like expectations for them.”
Self-banked is all about control. And for NetSpend, that means a heavy focus on features for its branded prepaid debit cards, including an online account center, 5% annual-percentage-yield (APY) savings account and a budgeting tool that lets users track and control their spending.
Self-banked is also about incentives. In August, American Express (AmEx) launched a rewards offer to its Serve suite of GPR cards. The American Express Serve Cash Back offers 1% cash back on purchases, and some of the same services that AmEx credit-card holders enjoy.
Click here to read about how fraud is affecting the GPR card category.
“We see prepaid as an entry point into AmEx membership, and a way to bring more customers into the franchise,” says Jarret Lew, director of retail partnerships for American Express, New York. “Regardless of where you sit in the spectrum, you get the same benefits, services and customer service as a card member would get.”
And self-banked is about accessibility. At Green Dot Corp., its checking account gives members access and control of their money from their computer, iPhone, iPod Touch or Android device. Capabilities include bill payment, sending and receiving money and depositing checks.
Whether adding cash to an account by swiping a debit card at the register or receiving money, GoBank is about “helping people get money into the account really easily and allowing them to manage it from anywhere,” says Angela Williams, the Nashville, Tenn.-based senior director of retail client management for Green Dot Corp., Pasadena, Calif. “We also offer the opportunity to get payroll direct deposits early, depending on your employer’s process and timing, potentially giving you access to your money sooner.”
This features frenzy is happening as the “typical” user of GPR cards itself diversifies, with millennials’ usage of the prepaid product category growing. To capture the loyalty of this demographic, GPR card providers and retailers need to get the basics right, with an emphasis on messaging and experience.
Myth Busting
Let’s talk about the myth and reality of the GPR card customer.
- The myth: People use GPR cards for reasons they do not want other people to know about.
- The reality: People use them for everyday spending. According to a recent Green Dot analysis, 93% of its customers who purchased their GPR cards at c-store chains used them to buy gasoline.
- The myth: People who use GPR cards do not have or want to have a bank relationship.
- The reality: A large portion are hybrid users who also have bank accounts. According to a 2013 survey of GPR cardholders by the Federal Reserve Bank of Philadelphia and Phoenix Marketing International, 90% had a checking account.
But perhaps one of the biggest myths about heavy users of GPR cards is that they are predominantly low-income. The reality is that households headed by millennials (ages 18 to 34) who earn $50,000 to $99,999 per year are GPR card “power users.” They use the cards 1.6 times more often than the average consumer.
Millennial households making more than $50,000 annually also spent significantly more using their cards than the average, or $142 per month, vs. a monthly average of $116 for the total survey sample.
Catering to millennials’ needs and preferences, therefore, is key to long-term GPR card success.
“They want control, they want the warm and fuzzy, they want to be the decision maker, with flexibility,” says Jen Seeker, senior director of accounts for NetSpend. “It’s not just what the traditional old bank can do, but it meets you where you are—so mobile payment, mobile wallet integration.” Eighty percent of NetSpend customers access their accounts through the mobile app.
“Fast, easy, digital: App usage is growing,” says Lew of American Express. “Everything you can do on serve.com you can do on the app as well. That’s how we try to touch [customers] is through that app.”
Marketing to this group effectively is similarly nuanced, say the GPR card providers. Social media is the preferred medium, with product education and financial tips the preferred content. But above all, the message needs to appeal to millennials’ dreams.
“It’s a mechanism to promote new features and benefits, a way to highlight positive customer experiences, and a way for aspirational talk in ways people maybe haven’t thought about,” says Lew.
“What customers want is the aspirational message of what they can have and what might not be right in front of them today,” says Seeker. “Social media is a key for reaching not just the millennial demographic at this point, but a broader group of customers.”
Talking About Generations
Beyond the card features and marketing, the actual GPR card purchase experience is also critical with millennials. In particular, it needs to be easy and seamless, from purchase and activation at the store to access online and via mobile apps.
“Millennials do make that quick buying decision,” says Stites of NetSpend. On the flipside, they will abandon a GPR card retailer or provider quickly if they do not get the experience they desire, he says.
“The benefit a c-store has is the nature of the convenience of the channel,” but retailers and providers must step up to the challenge, says Williams of Green Dot. “People are wanting to get in and out quickly. They’ve got to be able to find the products quickly, the cashier has to know how to do the transaction easily. It has to be convenient.”
How do you ensure a quick, seamless transaction? Retail best practices include:
- Place educational signage, including front-door decals and signage at the racks, throughout the store to communicate and reinforce the product offer and selection.
“Some of it comes down to the fundamentals of product awareness,” says Seeker. “Is it easy to find in the store? Is it easy to shop once the customer gets there? And how do we make it the best shopping experience for them?”
- Establish and manage a home for the category. “Choice drives sales,” says Lew of American Express. “You want to keep the plan-o-gram and fixture well stocked, well managed and maintained.”
“Those [retailers] who are most successful definitely have a dedicated category manager on prepaid and in many cases have a dedicated financial services area in their store,” Williams says.
- Train, train and train again. The employee-customer interaction is perhaps the most crucial piece of GPR card success. And it is also the most challenging, considering that the purchase transaction is not as simple as scanning a 20-ounce energy drink.
Adding to the challenge in the c-store channel is high turnover. It means that training employees to sell GPR cards can be as much about boosting their confidence as it is about educating them on the basics of activating and reloading cards.
“Even though it’s the same as a 2-liter or 20-ounce [soda to the consumer], it is not the same in most cases to the associate behind the counter,” Seeker says. “I’m doing two or three things to activate the card, but it’s the confidence to make that first swipe.”
Williams suggests creating a special section in a retailer’s training guide dedicated to GPR cards; providers can assist with content. But an even more powerful tool is to simply make the sales associate a GPR card user, so that they eventually become a brand ambassador.
“There’s a good chance one of the people who work in your stores carries one of our cards, and it’s their product of choice,” Williams says. “When that happens, they become proponents and know about the product, and can talk about the product.”
“The best experience is to offer those employees to be cardholders and to be users of their product,” says Seeker of NetSpend, which offers no-fee ATM withdrawal in its employee card program to create product ambassadors and encourage product familiarity.
Once employee confidence is there, he or she can move on to the next step: encouraging customers to return to the store for reloads.
“It boils down to [retailer] engagement,” Seeker says. “There are two routes you can take: a J-hook on the rack or true engagement, and understanding of the product from the top down.”
The Shifting GPR Card Customer
The “typical” GPR card customer is anything but: Higher-income millennials make up a greater portion of the customer base.
| Annual Household Income | Percent Who Own (August 2013) | Percent Who Own (August 2012) |
| <$25,000 | 28% | 26% |
| $25,000-$49,999 | 21% | 22% |
| $50,000-$99,999 | 26% | 16% |
| $100,000+ | 27% | 18% |
| Total, all respondents | 25% | 21% |
| Generation | Percent Who Own (August 2013) | Percent Who Own (August 2012) |
| Millennials (18-32) | 45% | 34% |
| Generation X (33-48) | 35% | 27% |
| Baby boomers (49-67) | 18% | 16% |
| Greatest generations (68+) | 4% | 4% |
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