Posted by Mark Brousseau
Pre-paid cards are primed for explosive growth in the coming year, according to a survey conducted by Firstsource Solutions.
Fifty percent of payment industry professionals surveyed expect wider adoption of pre-paid cards as more consumers move away from credit cards and cash. Nearly 30 percent of respondents said that more consumers would become “loaders” (i.e. depositing more money to their pre-paid accounts).
“We’re seeing a growing interest in pre-paid cards in consumer segments that weren’t originally drawn to using such a form of payment,” says Tim Smith, senior vice president, Banking Financial Services & Insurance, Firstsource. “Our findings support recent research about the upward trend in the pre-paid market which shows that an estimated $37 billion was loaded onto prepaid cards last year, compared to $18 billion in 2009 and $9 billion in 2008.”
Survey respondents indicated that there is a huge opportunity for the pre-paid market to expand its customer base beyond the most likely consumer targets. More than 40 percent indicated that increased scrutiny from regulators regarding loading and set-up fees will pose the greatest risk to the industry. Additionally, 47 percent said educating card holders on the nuances of a pre-paid will be critical to successful adoption and overall growth in the market.
Firstsource’s survey also examined sentiment on the current regulatory climate in the payments industry. While Dodd-Frank was top-of-mind for 45 percent of payments professionals, the Consumer Financial Protection Act has fallen off the radar for most industry executives (only 9 percent of respondents indicated it was currently a priority issue).
What do you think?
Showing posts with label cards. Show all posts
Showing posts with label cards. Show all posts
Thursday, June 2, 2011
Tuesday, December 21, 2010
The Promise of Prepaid Cash Cards
Posted by Mark Brousseau
It’s estimated that the percentage of U.S. households without bank accounts may be as high as 26 percent. So what happens to the $1.1 trillion that those households take in each year? According to Turner Investments, much of that money is likely to end up on prepaid cash cards over the next five years.
Turner Investments anticipates that the market for prepaid cash cards may grow at double-digit annual rates between now and 2015. Two small prepaid-card vendors that appear to be well positioned to profit from that growth are Green Dot and NetSpend Holdings, Turner Investments says.
For the consumers averse to traditional banking, Turner Investments says prepaid cash cards may hold three benefits:
•The cards can be a cheaper alternative to checking accounts. Consumers who are prone to overspending can’t spend more than they put on the cards, so they aren’t exposed to overdraft charges. Also, the increased checking-account fees resulting from new federal financial reforms are driving some consumers to the cards.
•The cards require no background check, unlike some checking accounts.
•The cards are convenient to load and use, enabling customers to take their paycheck to a retailer where they can have the money loaded onto a card and start shopping immediately.
What do you think?
It’s estimated that the percentage of U.S. households without bank accounts may be as high as 26 percent. So what happens to the $1.1 trillion that those households take in each year? According to Turner Investments, much of that money is likely to end up on prepaid cash cards over the next five years.
Turner Investments anticipates that the market for prepaid cash cards may grow at double-digit annual rates between now and 2015. Two small prepaid-card vendors that appear to be well positioned to profit from that growth are Green Dot and NetSpend Holdings, Turner Investments says.
For the consumers averse to traditional banking, Turner Investments says prepaid cash cards may hold three benefits:
•The cards can be a cheaper alternative to checking accounts. Consumers who are prone to overspending can’t spend more than they put on the cards, so they aren’t exposed to overdraft charges. Also, the increased checking-account fees resulting from new federal financial reforms are driving some consumers to the cards.
•The cards require no background check, unlike some checking accounts.
•The cards are convenient to load and use, enabling customers to take their paycheck to a retailer where they can have the money loaded onto a card and start shopping immediately.
What do you think?
Tuesday, October 12, 2010
The Proper A/P Toolkit
By Bruce Bourdon, CPCP
Vice President, Healthcare Channel Sales Manager
U.S. Bank Corporate Payment Systems
Two key challenges face healthcare accounts payable departments today: Shrinking profit margins due to rising costs, and decreased cash flow due to slower collections and reimbursements.
The cash flow pipeline often plugs up due to an inability of the healthcare provider to extend payment terms with its top suppliers. Operational costs, meantime, have been soaring due to the high cost of printing and mailing paper checks, and often re-issuing and re-mailing checks that get lost. Finally, AP staff spent far too much time researching vendor inquiries about the status of the payment they are owed.
If any industry could stand to benefit from going paperless, it’s healthcare. Yet, a 2010 U.S. Bank/IAPP survey showed that 61 percent of all healthcare payments today are made by paper check. A similar survey, this one by PayStream Advisors in late 2009, found that 68 percent of all invoices are traded by paper, and only about 25 percent of all purchase orders are sent electronically to suppliers.
That’s about to change. The U.S. Bank/IAPP survey that showed such a high rate of paper check payments also predicts a 2/3 reduction in check payments and a three-fold increase in use of purchasing cards over the next three years, based on feedback from respondents.
Some may wonder, what is taking the healthcare industry so long to jump on the technology conversion bandwagon? The answer: it is hampered by many of the same roadblocks being experienced by other industries. Namely, perceived external barriers such as limited willingness or capability of suppliers to handle e-payments, and perceived internal barriers such as the high cost of conversion to e-payments or worries about their own capability to manage the transition.
Such concerns are often overblown. The cost of conversion, for example, is dwarfed by the savings realized over time, according to recent studies. To the extent that it’s measured at all, cost-per-paper-invoice can vary from a dollar to over $15 dollars, says the PayStream Advisors survey. But interestingly enough about half the companies surveyed have no idea what it’s costing them to process each paper invoice.
Electronic processing makes the costs much more transparent and easier to measure, therefore making it easier to spot the cost bottlenecks and act upon them. Aberdeen Group has shown that electronic invoice processing shaves $6 to $7 off the cost or processing each invoice. How? By accelerating the approval cycle, reducing the number of lost and missing invoices, reducing the number of “exceptions” and, ultimately, reducing FTE or allowing redirection of work into more value-added activities.
Annapolis Consulting puts it this way: Automation increases ease of use, ease of use increases adoption, adoption increases on-contract spend, on contract spend enhances visibility and visibility reduces wasteful spend. Just as important, visibility enhances leverage when it comes time to negotiate contracts with suppliers.
Today’s payables toolkit brims with options for the healthcare provider, from Electronic Invoice Presentment and Payment (EIPP) to a wide array of paperless e-payment options including commercial cards, virtual or “ghost” card accounts, wire payments and Automated Clearinghouse (ACH). End-to-end automation is both possible and achievable. It’s easier than ever to establish e-payments as the standard for conducting business with your key suppliers.
Vice President, Healthcare Channel Sales Manager
U.S. Bank Corporate Payment Systems
Two key challenges face healthcare accounts payable departments today: Shrinking profit margins due to rising costs, and decreased cash flow due to slower collections and reimbursements.
The cash flow pipeline often plugs up due to an inability of the healthcare provider to extend payment terms with its top suppliers. Operational costs, meantime, have been soaring due to the high cost of printing and mailing paper checks, and often re-issuing and re-mailing checks that get lost. Finally, AP staff spent far too much time researching vendor inquiries about the status of the payment they are owed.
If any industry could stand to benefit from going paperless, it’s healthcare. Yet, a 2010 U.S. Bank/IAPP survey showed that 61 percent of all healthcare payments today are made by paper check. A similar survey, this one by PayStream Advisors in late 2009, found that 68 percent of all invoices are traded by paper, and only about 25 percent of all purchase orders are sent electronically to suppliers.
That’s about to change. The U.S. Bank/IAPP survey that showed such a high rate of paper check payments also predicts a 2/3 reduction in check payments and a three-fold increase in use of purchasing cards over the next three years, based on feedback from respondents.
Some may wonder, what is taking the healthcare industry so long to jump on the technology conversion bandwagon? The answer: it is hampered by many of the same roadblocks being experienced by other industries. Namely, perceived external barriers such as limited willingness or capability of suppliers to handle e-payments, and perceived internal barriers such as the high cost of conversion to e-payments or worries about their own capability to manage the transition.
Such concerns are often overblown. The cost of conversion, for example, is dwarfed by the savings realized over time, according to recent studies. To the extent that it’s measured at all, cost-per-paper-invoice can vary from a dollar to over $15 dollars, says the PayStream Advisors survey. But interestingly enough about half the companies surveyed have no idea what it’s costing them to process each paper invoice.
Electronic processing makes the costs much more transparent and easier to measure, therefore making it easier to spot the cost bottlenecks and act upon them. Aberdeen Group has shown that electronic invoice processing shaves $6 to $7 off the cost or processing each invoice. How? By accelerating the approval cycle, reducing the number of lost and missing invoices, reducing the number of “exceptions” and, ultimately, reducing FTE or allowing redirection of work into more value-added activities.
Annapolis Consulting puts it this way: Automation increases ease of use, ease of use increases adoption, adoption increases on-contract spend, on contract spend enhances visibility and visibility reduces wasteful spend. Just as important, visibility enhances leverage when it comes time to negotiate contracts with suppliers.
Today’s payables toolkit brims with options for the healthcare provider, from Electronic Invoice Presentment and Payment (EIPP) to a wide array of paperless e-payment options including commercial cards, virtual or “ghost” card accounts, wire payments and Automated Clearinghouse (ACH). End-to-end automation is both possible and achievable. It’s easier than ever to establish e-payments as the standard for conducting business with your key suppliers.
Sunday, April 12, 2009
Economy Fuels Prepaid Card Demand
Posted by Mark Brousseau
Global economic downturns appear to be weighing heavily on the growth of credit and debit card markets worldwide, while simultaneously fueling an increasing demand for prepaid cards.
Prepaid industry participants however, will discover unique challenges in growing their business in the international markets, according to Mercator Advisory Group.
"Going after prepaid opportunities in the international market requires more than just understanding of the macro-economies and regulatory environments in each markets," comments Terry Xie, Director of Mercator Advisory Group's International Payments Advisory Service. "Fully understanding targeted customers, knowing where they are, and what financial help they need, among others critical factors, are pre-requisites for designing and implementing creative product plans to best serve these customers. In addition, selecting the right sales, marketing, and distribution channels while aligning the interests of different parties involved in a prepaid business ecosystem are often key success factors in serving prepaid customers around the world."
Key findings on the prepaid card market from Mercator Advisory Group:
... Legal, regulatory, and cultural differences in international markets are significant and represent challenges for international players.
... Out-of-the-box thinking is crucial as prepaid business is a non-traditional market for the banks. This gives specialized program managers the edge in competition.
... Innovations in providing prepaid solutions to identify and serve un-meet financial needs in developing markets bring lots of potentials.
... The value chains of the prepaid card industry in different markets tend to be complicated and demand careful considerations in the designing of a prepaid business model. Getting different parties involved and building a business ecosystem requires creative thinking and a willingness to cooperate.
... The design of prepaid card products need to be based in-depth understanding of the market opportunities and consumer behavior. A successful prepaid program will have features and functions that resonate with a large group of targeted users with very specific needs.
What do you think? Post your comments below.
Global economic downturns appear to be weighing heavily on the growth of credit and debit card markets worldwide, while simultaneously fueling an increasing demand for prepaid cards.
Prepaid industry participants however, will discover unique challenges in growing their business in the international markets, according to Mercator Advisory Group.
"Going after prepaid opportunities in the international market requires more than just understanding of the macro-economies and regulatory environments in each markets," comments Terry Xie, Director of Mercator Advisory Group's International Payments Advisory Service. "Fully understanding targeted customers, knowing where they are, and what financial help they need, among others critical factors, are pre-requisites for designing and implementing creative product plans to best serve these customers. In addition, selecting the right sales, marketing, and distribution channels while aligning the interests of different parties involved in a prepaid business ecosystem are often key success factors in serving prepaid customers around the world."
Key findings on the prepaid card market from Mercator Advisory Group:
... Legal, regulatory, and cultural differences in international markets are significant and represent challenges for international players.
... Out-of-the-box thinking is crucial as prepaid business is a non-traditional market for the banks. This gives specialized program managers the edge in competition.
... Innovations in providing prepaid solutions to identify and serve un-meet financial needs in developing markets bring lots of potentials.
... The value chains of the prepaid card industry in different markets tend to be complicated and demand careful considerations in the designing of a prepaid business model. Getting different parties involved and building a business ecosystem requires creative thinking and a willingness to cooperate.
... The design of prepaid card products need to be based in-depth understanding of the market opportunities and consumer behavior. A successful prepaid program will have features and functions that resonate with a large group of targeted users with very specific needs.
What do you think? Post your comments below.
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