Frank Squilla has more than 25 years of experience in the prepaid-card industry. Since joining Atlanta-based InComm in 2004, he has become responsible for more than $2 billion in national and regional chain sales as the executive vice president of industry and trade relations across convenience and other retail sectors.
CSP spoke with Squilla about the future of the prepaid-card industry as technology advances and customers adjust to a changing retail world.
Q: How have customer attitudes about prepaid cards changed over time?
A: When you say “prepaid cards,” they have to be separated into telecom products, gift card, content and financial services.
The mode of selling in convenience stores is changing dramatically. You used to see no-contract phones for sale in convenience stores. Now SIM cards are being sold in kits that are on pegs as opposed to phones. It’s simpler, easier and less inventory for the convenience channel to manage.
Closed-loop gift cards, or cards attached to one retailer, have grown significantly in popularity, but the one that’s ruling the day in c-stores is open loop. By that I mean Visa or MasterCard gift cards that can be used anywhere but are nonreloadable. They’re being used for both gifts and self-use.
Q: How has the prepaid opportunity in c-stores evolved?
A: The industry is morphing into a transactional service model with the ability to pay your bills in a convenience store. If you don’t have a bank account, maybe you can just get a barcode and run down to the c-store, scan it and pay your bill there.
Then there’s online payments. Maybe you want to buy something from Amazon but you don’t have a credit card or a bank account. You can go to a retailer and load cash onto your account through an Amazon Cash product.
We’re creating products for physical and digital consumption and serving as an intermediary between product providers and retailer distribution and consumer activation.
Q: Why do customers buy prepaid cards today?
A: In the past, it was mostly the unbanked who were buying cards because they didn’t have credit and they needed to make a phone call with a mobile phone. Now customers are buying prepaid cards for self-use and online purchases. That’s a telling sign and that’s what’s driving growth. It’s not just a gifting environment anymore. Sure, we see an uptick during holidays, but we’re noticing so much more personal use, and that tells us that people are using these cards whether they have a bank account or not. They are using prepaid cards because they are budgeting, or because they are protecting their credit cards or bank accounts from potential online breaches.
Q: What age group uses prepaid cards the most?
A: We just put out a study on the Generation Z [those born between the mid-1990s and 2010] female shopper. That group buys the widest array of prepaid products and buys the most frequently. They’ll purchase prepaid cards anywhere from weekly to several times a month. But they’re not spendthrifts.
They’re mindful of what they’re spending and of their finances. They plan purchases beforehand. That generation brings together the preference for traditional in-store shopping alongside the rapid advances in mobile and communication.
Q: How have prepaid cards changed the mobile phone industry, and vice versa?
A: All of the phone-plan carriers are fighting tooth and nail for customers. Just about every single wireless provider has a no-contract program. And the lower product pricing from the no-contract business has given consumers even more reasons to go prepaid.
Consumers today are seeking convenience in their mobile-phone plans. We’re seeing more customers topping up online or via mobile devices, which is a big shift from just a few years ago. So the fight for that airtime top-up is consistent.
Q: What big changes are on the horizon for the industry?
A: The potential for tolling and transit is just huge across the country as more of those entities have moved to debit [toll tags and transit cards].
Building delivery digitally is another big item. We’re working with our brand partners to ... [create] a seamless mobile experience for end users, whether it’s a digital card or it’s purchased through a different source. It’s all going to be driven by the fact that just about everyone has or is going to have a smartphone, and people want to do more on their mobile devices.