Show Me the Money!

Picking up from my last two posts in which I discuss the importance of having a compelling customer value proposition and understanding costs, we’re now ready to talk about everyone’s favorite topic: Revenue! Here are some sources of revenue for a prepaid program:

• Interchange
• Interest
• Fees
• Merchant/partner funded offers

If you think back to the list of costs discussed last week, you will see that this is a much smaller list, unfortunately!

We always encourage our clients to concentrate on maximizing and growing non-fee revenue because we believe that this strategy leads to more sustainable programs. Look at your value proposition and customer behavior and let those guide where you seek out additional revenue or create new sources of revenue.

Today, most programs rely too heavily on fees. And sometimes those fees can be less than transparent. It is important to be fair and upfront about the fees associated with your prepaid card. Not only is this just the right way to do business, but it will also help you retain customers. With churn being such a big challenge in this industry, a sure way to lose customers (and take a loss on the investment you made to acquire them) is to have excessive, hidden, or hard-to-understand fees.

So then the question becomes, “How do I drive non-fee revenue?” Here are a few things to consider:

Drive Usage at the Point-of-Sale

Get creative with encouraging customers to use their cards more. There are a number of ways to do this and our next webinar (register here) will explore this in more detail.

Partner Arrangements

Look for arrangements with partners, such as merchants, to fund programs or benefits for your cardholders.

Add Sticky Features

As we discussed in earlier posts, a basic prepaid card doesn’t have the same stickiness as a debit or credit. The longer that cardholders hold onto their cards, the more they will use it, resulting in increased interchange revenue. Consider things like direct deposit, remote deposit capture, targeted offers, budgeting capabilities, and mobile features.

Mobile, especially, will help to make your card more sticky so we encourage all of our clients to leverage this capability. The best way I can think of to convey how mobile drives stickiness (while also increasing revenue and decreasing costs, by the way) is to give you a couple of examples that I have seen with our clients at i2c.

We found in analyzing one of our client programs that cardholders using the i2c mobile app made three times more POS transactions and twice as many loads as those who don’t use the app. Think of the added revenue! Mobile alerts help as well. We saw one client enjoy a 9% increase in POS transactions within a month of deploying i2c alerts to their cardholders.

In both of these cases, servicing costs also decreased because these mobile features gave customers to access real-time information about balances & transactions without having to call the call center.

Hopefully, this post will get you thinking of creative ways to drive new sources of revenue for your prepaid card program. Next week, I’ll discuss how you can use data analytics to make smarter decisions about how to manage costs and increase revenue. Access to data intelligence is emerging as one of the biggest must-haves for any prepaid program. You’ll see why next week!