Federal Reserve Bank Payments Expert Susan Herbst-Murpy Shares Insights about GPR Prepaid Cards

As someone who was involved in the formation of the Network Branded Prepaid Card Association (NBPCA) in the U.S., it was a real pleasure to be present at the inaugural symposium of the Canadian Prepaid Providers Organization on May 23. It is exciting to watch the prepaid card market develop in Canada. Both the differences and the similarities between the Canadian and U.S. markets will make it interesting to compare and contrast how prepaid cards evolve in the two places.

In the U.S., government initiatives appropriated prepaid cards early on as a means to distribute public funds electronically to unbanked individuals who could not otherwise receive direct deposits. These large, and often mandatory, programs were, for many people, their first introduction to general-purpose reloadable (GPR) prepaid cards. This created an impression, often negative, that this was a product for unbanked and lower-income consumers.

In recent years, other U.S. market segments have adopted prepaid cards. Many have traditional bank accounts, but opt to add a prepaid card to their suite of products. Many of those who have adopted GPR cards in recent years are higher income. In fact, in the U.S., the GPR prepaid card power user is a high-income young adult. As attendees at the May event learned, Canadian providers have already recognized the need to serve this demographic.

So, what is the “secret sauce” that makes GPR prepaid cards a solution for public (and private) sector organizations wishing to lower their disbursement costs, and for young adults managing their household budgets? Flexibility.

GPR prepaid is more a set of functionalities than a product. These functionalities can be assembled in a variety of ways, often augmented with other features, to deliver solutions to consumers, businesses and governments for disbursing, obtaining, storing, and earmarking funds which can be spent or accessed within the global network of merchants (storefront and e-commerce,) ATMs and banks honoring the card’s brand.

Cardholders have been innovative in using this flexibility to create customized solutions for their own needs, from allowance cards for the kids to prefunding the family vacation.

I’m looking forward to seeing the creative applications that Canadian providers and consumers will have for these little pieces of plastic.