More Than a Financial Product: Prepaid as an Enabler for Mobile Payments

Prepaid is the enabling technology and convergence platform for mobile payments. I’m not sure everyone realizes this, as I usually only hear prepaid described as a financial product. But it’s not just another financial product. Compare it to credit and debit, for example. Credit and debit have very specific purposes – credit allows you to access a credit line and debit allows you to access a DDA account. What is prepaid? It can be a way to get your paycheck. Sometimes it’s a way to give a reward or incentive. Or it can be a general-purpose financial tool for everyday spending. Think about it. Organizations across the globe are using prepaid for so many different things and new applications are being rolled out every year. So because of this, I think we need to value prepaid as more of an enabling technology than a product.

Because it doesn’t have a specific purpose, it is not bound by the same constraints as credit and debit, and this is precisely why it is the ideal building block for mobile payments.

Prepaid provides a core enabling technology that is flexible enough to support new products that fuse mobile and loyalty with payments. Prepaid can handle multiple types of entitlements or stores of value for mobile wallets, and it provides a platform to integrate rewards and digital offers while providing very rich data on consumer behavior.

It also gives us flexibility at the point-of-sale for payment acceptance. For many years now, we have known that mobile will play a key role in the future for payments and commerce. Unfortunately, the infrastructure at the point of sale is just not in place to allow widespread acceptance at this point. Coupling a prepaid card with a mobile can allow consumers to enjoy all of the benefits of mobile payment schemes without running into a payment acceptance issue when trying to buy something. If NFC or QR codes are not supported at the POS, the merchant can always swipe a plastic card or key in the card number.

In this way, prepaid solves the chicken and egg dilemma that has stood in the way of mobile payments adoption. It can provide widespread acceptance while merchants upgrade their POS infrastructure. In many ways, a prepaid card is to a mobile wallet what a debit card is to a checking account. Think about how much more accessible debit cards made our checking accounts. Prepaid cards do the same for mobile wallets today. It’s an exciting new world where mobile, loyalty and payments are converging, and prepaid really is the enabler to make it all a reality.