DES MOINES, Iowa—Loading prepaid cards just got a little easier with the introduction of a mobile app for adding money to the plastic.
LSC, Naperville, Ill., is offering an app to card issuers that allows for real-time money movement to prepaid from smartphones.
Payments experts told CUToday.info that consumer demand for the feature is growing, as being able to load money via a mobile app is more convenient and efficient than working off a website over the smartphone or rushing back home to load the card via the PC.
In fact, loading a prepaid card just prior to shopping or right before a purchase is becoming more popular not only due to convenience, but to also fight fraud. More consumers are choosing to use prepaid to limit their exposure if their card data is stolen. Now, analysts say it is easier to walk around with little or nothing on the card until the time of purchase.
Growing Trend
Jeff Falk says The Members Group has recognized the trend.
“We have yet to have any real data around this, but as people become more cognizant of the data breaches, the desire to use prepaid and kee
Tyler Miller, LSC
Jeff Falk
p low balances on the card is something we expect is going to grow,” said the product manager of prepaid for TMG. “The card will be loaded just in time, and as needed. Say you are in line at Target and you know your card balance is $5 and you think you need $50 for purchases, you pull up your phone and transfer $45 from your debit card or another account.”
Tyler Miller, VP of brand marketing for LSC, said people like the security of having a card in their wallet that often has little money on it.
“They walk around with basically a five-cent piece of plastic,” Miller said. “In reality, no real financial liability if their card data is stolen. Just add the money as needed. It gives people more freedom. Again, this is an app designed for the mobile device; it is quick and easy. The consumer is not looking at a website via their phone, which can be difficult.”
Part of the appeal of prepaid is for underbanked consumers use to rebuild credit. Miller said that people rebuilding credit often need to move money around easily. “These consumers generally have to move money fairly aggressively, every dollar counts. This product lets them do that. When you are rebuilding credit, $5 to $10 can make a big difference.”
Big And Small Ticket
Miller added that high-end consumers like the flexibility of loading a lot of money on their card quickly for a big-ticket purchases, leaving limited fraud exposure the rest of the time.
Allowing consumers to control their payments cards via a smartphone is a growing trend. CO-OP Financial Services last year introduced CARDNav, which like Discover’s new on/off switch for its plastic, offers that functionality as well as several others, including checking balances and setting usage parameters, such as spending limits or retailer acceptance.
Two prepaid cards, Red Giant and Blinx, also allow loading of funds via a mobile app.
Falk added that the card control features must be simple and easy to use, especially the on/off switch.
“The card brands have expressed concern that if the consumer does not know they have turned off the card off, and then go to use it and it does not work, they will blame the card when the fault lies with them,” he said. “So there is an educational component to this as well.”