Prepaid Card Issuing in the Digital Payments Ecosystem

The COVID-19 pandemic has drastically accelerated the move to digital and contactless payment solutions by an estimated 5-10 years. During a panel at the CPPO 2021 Prepaid Symposium, a panel of card issuing experts explored the implications of the emergent landscape on prepaid issuers and the new opportunities and use cases it presents.

Moderated by Karen Budahazy, Vice President Digital Enablement and Issuing for Peoples Group, the panel consisted of: Seth Ross, GM, Wallet and Consumer Services at Ceridian; Lesley Shaw, Vice President Enterprise at KOHO; Sandeep Kawadkar, Vice President of Customer Products & Platforms at PC Financial and Jean Amiouny, Co-Founder and CEO of Shakepay.

“In 2021, the payments industry has had lots of opportunities. The 10 years of digital transformation in 10 months has uncovered so much opportunity that it may be hard to decipher where to turn next and what to prioritize,” Budahazy said. “One place we know will be accelerating this year will be card issuing.”

During the panel, the audience was asked what they felt was the future of prepaid, to which respondents ranked these as the top four:

  1. Challenger bank accounts for consumers 
  2. Buy Now Pay Later 
  3. Challenger bank account for businesses 
  4. On-demand pay

As for key takeaways for how people and businesses have changed how they interact with financial services, here’s a recap from the payments leaders: 

Sandeep Kawadkar: “It’s clear that there has been a sea change in terms of customer expectations in what they want and how they want to interact. Merchants, too. They want to invest heavily in e-commerce solutions because this is here to stay. There has been a significant amount of innovation and customer centricity perspective. Customers are saying they are needing to have something omnichannel. They are making choices based on how they want to pay and merchants are having to adapt, and will continue to have to adapt.”

Seth Ross: “Contactless was another trend that was accelerated by the pandemic. From a cross-border view, contactless was not significantly adopted on the U.S. side. Now it’s big. It also raises the question about bank branches and how people visit banks.It’s more compelling for some of the virtual solutions. …There was a structural shift that has been going on for many years around an atomization of banking services to these primary pieces that can be taken and put together in new ways. That in itself is facilitating whole new use cases.”

 Jean Amiouny: “We’re seeing use cases for rewards being used as a prime example of disruption. Shakepay, for example, are rewarding Visa card rewards with bitcoin…not a random reward. I think this is going to open up Pandora’s box for how rewards are structured.”

Lesley Shaw: “There has been more openness to questioning what can be done to improve customer experience in many assets of payments and baking…There has been a change in customer experience. There will always be a prominent strong-hold of Canadian consumers who want a bricks and mortar branch. But that is shifting. We see this disintermediation of the big banks and the core services provided. The use cases are really strong for people looking outside the traditional banking structure. But there is a mindset of ‘what if I need to use it at some point’. It’s about letting Canadians know they will have access to the services they need without that physical presence.”

Why Prepaid is Ripe to Help Scale Innovation

During the session, the financial leaders also provided their perspective on where prepaid fits into helping scale payments innovation. The conclusion of the group: Prepaid isn’t just a product anymore, it’s a platform presenting new use cases every day for businesses and consumers. 

Seth Ross:  I think prepaid will scale. It’s not about the product anymore. It’s about the consumer’s needs. The platform of prepaid payments – it is so flexible and allows us to think of the needs of the consumer and allows us to meet the consumer where they are in a way that is highly useful — and in a way that is familiar for consumers and in a way that is massively accessible in ways that credit isn’t. It is a very powerful platform to create great products for consumers. …The lines between debit and prepaid are blurred for the consumer. Consumers care about the user’s experience. BUT prepaid is starting to surpass the user experience with prepaid.

Sandeep Kawadkar:It goes back to where we’ve seen the payments innovation. It’s about products or needs — cash, checks, etc. Those give rights to their own set of challenges. But with technology, when we look at today’s customer perspective…we also have to think about disbursements. Those have escalated from a prepaid perspective. …There’s a blending of debit and prepaid is becoming an overlap. It’s the same experience online regardless of what payment they are using. Customers probably don’t think about prepaid. Prepaid people want to know what they are going to get and what use cases are available.”

Jean Amiouny:On the prepaid side, it really does allow us to offer a product to anyone. It’s accessible. It allows anyone from any walk of life to get a card and spend how they want. You start with the pain and start with what the customer wants to do. The prepaid card is looking great. I’m really excited. …It’s much easier to get prepaid off the ground and get to market….The prepaid infrastructure is much easier to innovate upon.”

Lesley Shaw: “There’s a democratization of access that comes with prepaid. There’s a massively understated population when it comes to access to great financial services. Prepaid fills that gap in ways that traditional financial services haven’t been able to do…The market for prepaid is anyone….It’s not just about access. It’s about control over finance and access to credit card rails.”

Watch the full panel discussion: Prepaid Card Issuing in the Digital Payments Ecosystem

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