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MasterCard Inc. this week rolled out a service that lets users of MasterCard-branded prepaid cards pay bills at the card issuer’s Web site or by phone. Aimed squarely at the underbanked population, the service relies on the MasterCard RPPS network for links to biller accounting systems and Aliaswire Inc., a 5-year-old Cambridge, Mass., payment-gateway provider, for integration into issuer and program-manager sites. The new service allows cardholders to schedule and make bill payments, monitor payments, view posted payments, and set reminders.
MasterCard is not the first prepaid player to announce new features intended to hold onto cardholders. Card issuers and program managers are finding out it’s one thing to get the cards into circulation, but it’s another to keep them there. One way to keep cards in wallets and purses is to make them reloadable, which the major card networks like Visa Inc. and MasterCard Inc. have done. But even general-purpose reloadable cards have a limited shelf life. The average retention rate for these products is a scant six to eight months, according to research by Mercator Advisory Group Inc., Maynard, Mass. “The industry is still struggling [with retention],” says Brent Watters, analyst in the prepaid advisory service at Mercator.
The next step is to add features like online bill payment, which could be especially useful to users who otherwise don’t have access to online payment services. Green Dot Corp., for example, already offers a free online bill-payment service for its prepaid Visa and MasterCard cards. “It’s something [general-purpose-reloadable] issuers are going to have to provide to have that stickiness,” says Watters. Indeed, Steve Parento, vice president in MasterCard’s global prepaid product management unit, says a survey MasterCard conducted a year ago indicated about half of prepaid cards either had an online bill-pay feature or were set to get one. “It can be a very useful tool,” he says. “We want to make it easy to actually offer it.”
Utility, Parento says, should make a difference in boosting retention. “We’re looking at those things we can bring to that product to make it more useful and relevant to the consumer, so that retention is definitely enhanced.”
Because of RPPS, MasterCard’s new offering will reach 6,000 merchants and billers, allowing for fast account updates with a broad swath of companies. “That’s a very smart move,” says Watters, who says bill-payment services for prepaid cards typically face a long slog acquiring merchants. With direct connections, a bill-pay service can make same-day or next-day electronic payments.
On the issuer and program manager side, the MasterCard service relies on a product called PayVox, from Aliaswire, which designed the software specifically to work with prepaid cards. Indeed, MasterCard in its announcement says issuers will find it easy to integrate, “eliminating integration fees.” Particularly interesting to MasterCard, Parento says, was PayVox’s ability to support Spanish-language instructions and telephone payment as an option. “Our cardholders may not always have easy access to a computer,” he notes.
Parento says there are not yet any clients live on the new service, though he says he’s had “interest expressed by many customers and partners,” without giving numbers. Pricing will consist of transaction fees levied by MasterCard to issuers, which can then choose whether to reprice the service to cardholders. Parento says he can’t give details about MasterCard’s fees.
