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Where the Growth Is

Harland Clarke’s newly expanded prepaid card suite helps financial institutions tap into a burgeoning market

In the financial services industry, the words “rapid” and “growth” are not often heard together during the current economic downturn. But both terms aptly apply to the prepaid card market, which is expanding exponentially as consumers seek alternative payment solutions that meet their changing needs, offer the convenience of cash and provide the security of a card.

According to Mercator Advisory Group, an independent research and advisory services firm exclusively focused on the payments industry, the total dollar amount loaded onto cards in the segment that includes Visa®-branded prepaid gift cards and debit cards in 2008 was $60.4 billion, nearly $20 billion more than the $40.6 billion loaded in 2007 (a 48.6 percent increase).1

That number is expected to rise again in 2010. In response to this growing trend, Harland Clarke recently expanded its prepaid card suite with two new reloadable debit cards: Visa Prepaid Debit Card and Visa TravelMoney® Card.

The Debit Factor

Harland Clarke began its prepaid card program several years ago with Visa gift cards. “We were one of the first suppliers of turnkey gift programs for financial institutions,” says Greg Kuyava, manager of sales and marketing for Harland Clarke Card Services. “Today we are one of the largest Visa gift card resellers in the country.” By enhancing its prepaid offerings with the Visa Prepaid Debit Card, Harland Clarke is able to further support financial institutions looking for ways to increase their account holder base and deposits. A significant opportunity exists in the underserved or unbanked markets, which represent approximately 40 million households in the U.S.2

According to Kuyava, earning the trust of the consumers in these markets is critical to success. “That’s where an effective turndown strategy comes in,” he explains. “The Visa Prepaid Debit Card enables financial institutions to provide a viable alternative to consumers who don’t yet qualify for a checking account due to poor or non-existent credit history.”

Although the Visa Prepaid Debit Card does not help build an individual’s credit, it does enable the consumer to leave the institution with a product rather than empty-handed, which also helps build good will in the community the institution serves. “Down the road, when these consumers are able to establish or improve their credit, they are more likely to return to an institution that earned their trust for additional products and services,” adds Kuyava. The Visa Prepaid Debit Card is also ideal for individuals or small businesses as a budgeting tool, for parents who want to control kids’ spending
while helping them learn financial responsibility, and for businesses to use as a payroll card. Cardholders can reload their cards an unlimited number of times, bringing the total value on the card to $5,000 each time, with cash, a check or direct deposit. Prepaid cards help lower the number of NSF fees, because prepaid cards only allow for purchases up to the amount available on the card. And consumers can enjoy the convenience, peace of mind and prestige that come with carrying a card, without the need for a bank account or a credit check.

On the Road Again

With the Visa TravelMoney Card, financial institutions now have a way to offer account holders a safe and convenient alternative to traveler’s checks. Unlike traveler’s checks, this prepaid debit card can be reloaded an unlimited number of times, bringing the total value on the card to $5,000 each time, at a participating financial institution or anywhere that displays the Visa ReadyLink logo.

The card offers other benefits as well, both for institutions and account holders. “The card transaction takes just a few minutes, and the teller line isn’t held up because an account holder needs to sign multiple traveler’s checks in order to validate them,” explains Nicole Machado, senior manager of operations for Harland Clarke Card Services. The TravelMoney Card also enables financial institutions that do not allow foreign transactions on their debit or credit cards to provide flexibility to account holders — without exposing the cardholder’s own debit or credit card to fraud. It is accepted at millions of locations worldwide, and travelers can obtain local currency from any Visa or Cirrus ATM machine. Additional travel-specific features include emergency cash and card replacement, lost luggage reimbursement, travel and emergency assistance, and Visa’s zero-liability protection for items purchased with the card.

A Turnkey Program

Harland Clarke’s prepaid reloadable cards are ideal for small and large financial institutions alike. “Smaller institutions like the low cost of entry, the revenue generation and the ability to provide a service generally found at larger banks and credit unions,” says Machado. “Larger institutions like the turnkey, low-hassle and low-risk aspects of prepaid debit cards, as well as the opportunity to expand their current card offerings.” The prepaid card program can be implemented quickly and administered with low risk and low overhead. According to Machado, “Financial institutions don’t require additional infrastructure because Harland Clarke’s program provides the BIN, Visa and network reporting and back-office work, including chargeback processing.”

prepaid cards chart

To start your reloadable Visa prepaid card program, or for additional information, contact your Harland Clarke account executive today. You can also call Card Services at 1.800.277.7637, e-mail us at cardservices@harlandclarke.com or visit our website at harlandclarke.com/cards.

1http://www.mercatoradvisorygroup.com/index.php?doc=Prepaid&action=view_item&id=397&catid=16
2 The CFSI Underbanked Consumer Study, Underbanked Consumer Overview and Market Segments Fact Sheet, June 8, 2008