This past month, Chicago was introduced to Ventra - a replacement for the Chicago Transit Authority (CTA) Chicago Card that was used to pay for bus or train rides. According to the CTA, more than 500,000 CTA riders have already registered Ventra cards as a deadline looms for Chicago Card riders to make the switch (the CTA will not accept Chicago Cards after Nov. 15, 2013). Until I received my new Ventra card in the mail this week I hadn’t stopped to notice this transit card is also an optional Debit MasterCard®.
My first thought was how this card will impact the unbanked or underbanked. According to the University of Illinois at Chicago’s College of Urban Planning and Public Affairs, 12.7% of Chicago households do not have bank accounts. That figure is fairly consistent with the data for Illinois released by the FDIC late last year. So now those households will have a new option for managing their daily commute and routine purchases. Then it dawned on me: and so will the other 87.3% of us. As Ventra ads say: “From transit, to transactions – Ventra does it all.”
With this new prepaid alternative on my mind I then read that a group loosely affiliated with Occupy Wall Street is launching their own prepaid debit card. The Occupy Card will be offered by the Occupy Money Cooperative, an organization that promises to provide people with access to low cost financial services. It is still raising money to offer the card by inviting potential “donors” to “take part in the revolution that will make banking fair, transparent and affordable.”
These two stories converged to remind me how quickly perceptions about prepaid cards are evolving. For years, prepaid cards were seen as a fee-heavy alternative to a regular credit or debit card – mainly marketed to people whose credit histories made them poor candidates for traditional banking services. That is changing – for a growing number of people, prepaid cards are a desirable alternative to traditional banking relationships. Large, mainstream banks are already in the game. Walmart and American Express teamed up to create Bluebird. Chase has their reloadable Liquid. PNC has their Smart Access card.
So what about your financial institution? Have you considered a prepaid card in your lineup of financial products and services? Perhaps it is time for you to look closely at your customer base and market area to see what percentage of your current or potential customers would be best served (and more profitable) by a prepaid card.