Finance Globe

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ABA: Prepaid MasterCard for Customers of Community Banks

A new turnkey program will help community banks offer prepaid credit cards to their customers, the American Bankers Association reported on Wednesday.

Business Solutions, a subsidiary of the ABA, will offer a variety of Prepaid MasterCard products, including general purpose reloadable, payroll, and gift cards. TransCard, a leader in prepaid credit card processing, and Business Solutions will team up to help small banks bring in new revenue through a large, untapped customer base, the ABA said.

“This is a real opportunity for banks to expand their revenue by reaching out to members of the under-banked community, who have expressed a desire to have more control of their money,” said William Kroll, president of Business Solutions.

Even consumers who have a standard credit card can benefit from the bank-issued Prepaid MasterCard. “It also offers bank customers a safe way to teach their teenage and college-age children how to budget their finances,” Kroll said.

The money deposited to load these prepaid cards will be FDIC-insured, offering a safe way to carry necessary funds without carrying a lot of cash. If the card is lost or stolen, the card can be replaced just like a standard credit card.

“This program eliminates the traditional barriers of entry for banks to become prepaid issuers,” said TransCard CEO Craig Fuller. “TransCard will provide banks with a turn-key, bank branded, prepaid program that can expand their deposit base, create new offerings to their retail base and establish prepaid products for their treasury relationships.”

The ABA says that prepaid spending has become more popular in these trying economic times. “According to a 2010 study by the Boston Consulting Group and commissioned by MasterCard Worldwide, total global prepaid spending is estimated to reach $840 billion by 2017. $442 billion of which is expected to be spent in the U.S.”

The customer approval rate for the prepaid credit cards is virtually 100%, and there is no risk of overdrafts fees.

Also, commercial clients can utilize the prepaid credit card to pay their employees. This is a more cost-effective and convenient way than using a traditional paper payroll check, where employees have to pay in time or money to cash their check. “Instead, the users will have immediate, 24-hour access to their money,” the ABA pointed out in their statement.

Cardholders will also have high-tech access to their funds with the prepaid credit card. They can use their mobile phones to pay bills, check balances, and receive text messages when the balance runs low.

According to a 2009 FDIC survey, 25% of Americans are under-banked and express a desire to use banks for better money management. The features on the prepaid credit card will be especially important to consumers in the under-banked community, the ABA said.

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Thursday, 29 July 2021

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