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Pre Paid Debit Cards By ILCUL
 

Pre Paid Debit Cards By ILCUL

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Presentation given by Vicki Ponzo

Presentation given by Vicki Ponzo

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    Pre Paid Debit Cards By ILCUL Pre Paid Debit Cards By ILCUL Presentation Transcript

    • Prepaid Debit A Real Solution For Credit Unions January 31, 2008 Presented by: Patty Smith
    • Topics of Discussion
        • What is a Prepaid Debit Card?
        • How does it work?
        • Why would my members want one?
        • Who is offering them?
    • Topics of Discussion
        • Why should I care?
        • What’s available to me?
        • What do I need to know to offer them?
      • Prepaid is a Debit CATEGORY
        • Account or Card is PRE Funded
        • Transactions are authorized and posted
        • against the Card Balance, NOT a DDA or Checking Account
        • *Stored Value – Europe – Rest of the world VALUE is on PLASTIC not Card Account
      What is a Prepaid Debit Card?
      • Non Reloadable - Typically Instant Issued
        • Gift – One Time Usage
        • Closed Loop and Open Loop – Branded
      • Reloadable – Typically Personalized
        • Multiple Use – Ongoing Relationship
        • Open Loop – Branded
      Card Categories
    • Reloadable: Segment Market
        • General Purpose Cards
          • Everyday Spending
        • Travel Cards
          • Alternative to Travel Cheques
        • Payroll Cards
          • Provides alternative to traditional payroll
          • Set up and managed by company’s FI
          • Saves money over traditional means
        • Family / TEEN Cards
          • Parental Control and Monitoring
    • Prepaid Debit Overall
      • The 3 rd Evolution of the Card Payment Business:
        • Credit - Pay Later
        • Debit - Pay Now
        • Prepaid - Pay Before
      • The fastest growing payment form in 20yrs!
    • Prepaid Debit - Mainstream
      • 2007 Year End Estimates
        • Greater than 7 Billion Transactions
        • Over $175 Billion Dollars Spent
        • Prepaid revenues for Visa/MasterCard will exceed $1.35 billion by 2010 – largest payment segment
        • Overall Awareness of Product – 75% with a greater than 90% satisfaction ratio.
        • * Network Branded Prepaid Card Association
        • * Edgar, Dunn & Company 9/07
      • Easy to understand and use for Consumers
        • Accepted and works like a reg Debit Card
          • Funds can be accessed via ATM, PIN POS
          • and Signature Channels – VISA / MC
        • Cardholder determines spending limits
          • How much to put on and when
          • Cards can be re-loaded as needed
          • Improved Budgeting and Control
      Benefits of Prepaid
    • Benefits of Prepaid
      • Convenience
      • Control
      • Security
      • Privacy
    • PLASTIC IS KING!!
    • Marketplace – Who is offering?
      • Green Dot
      • H&R Block
      • Retailers:
        • Wal-Mart
        • Target
      • Credit Card Issuers – Capital One
    • GREEN DOT
      • First ever Prepaid cards sold at neighborhood retailers with worldwide MasterCard ® Debit or Visa ® Debit and ATM acceptance
      • Green Dot - Everyday
      • Green Dot - Uso Diaro (customized for Spanish-speaking customers)
      • Green Dot - Student
    • GREEN DOT
      • Costly for Consumers
        • $9.95 avg Retail
        • $2.50 - $4.95 avg Load Fee
        • $2.50 ATM w/d
        • $4.95 Monthly Maintenance
      • Avg Annual Cost to Cardholder: $210 per Card
      • * Initial cost NOT included – Estimated 2 loads per month @ $2.50 + 3 ATM w/d a month
    • H&R Block - Emerald Savings TM
      • Prepaid MasterCard
        • Available to tax clients only
        • Tax Refund automatically loaded onto card
        • Can accept direct deposits
        • Can be re-loaded via Money Gram, Green Dot, Western Union
        • Fees Vary
        • Additional Savings & IRA Accounts offered
    • Wal-Mart and Target
      • 2 of the 5 largest Retailers on the band wagon!
        • Collectively : $150 Billion in Annual Revenues
        • Prepaid “Debit” Cards Cross Sold at check out
        • Immediate discounts apply
        • Additional Savings for future purchases
        • Accepts Direct Deposits
        • NO NEED TO OPEN NEW CHECKING
        • Moving toward - Decoupled: Transactions ACHed to FI
    • Capital One – Decoupled Cards
      • No need to open NEW checking or move Direct Deposit
      • Debit Transactions are ACHed to Cardholder’s checking account daily
      • Typically Pre-Approved
      • Automatic offers to Credit Cardholders
    • IMPACT TO CREDIT UNIONS
      • Loss of Debit Interchange Income
      • Loss of Deposits - Deposit Income
      • Loss and Erosion of Checking Account Base and PFI Relationships
    • Ignoring Prepaid Debit:
      • The biggest threat our Industry has seen to date:
        • 18.8% of CU’s Non-Interest Income comes from Debit Interchange
        • Total Non Interest Income 2 nd qtr 2007
          • $4.8 Billion
          • *Callahan’s 2007 Non-Interest Income Survey
    • John F Kennedy, April 12, 1959
      • The Chinese use two brush strokes to write the word “CRISIS”. One brush stroke stands for DANGER; the other OPPORTUNITY.
      • In a crisis, be aware of the danger – but recognize the opportunity.
    • Deciding WHAT to offer
      • Convenience Services: Not a Main Product
        • Gift Cards
        • Travel Cards
      • General Purpose: Main Product
        • New Markets – Unbanked, Niche Markets
        • Growth in current products
          • Supports Credit and Debit
          • Maintains current DDS Base and Direct Deposits
    • Deciding WHAT to offer
      • CUSTOM Programs
        • CU Manages Program- Plastics, load sites, CS
        • CU Assumes All Risk – Fraud, Overages, etc..
        • CU Earns All Income – purchase, loads, breakage
      • Agency Programs
        • CU Partners with Proven Provider
        • No Risk – No Liability
        • CU Earns Partial Income – purchase, monthly fees,etc
    • CU MONEY – Everyday Money
      • $500 Implementation Fee – Waived thru 3/31
      • Price to CU: $2.00
        • CU Sets Price to Member - $3.95 to $5.95 avg
      • CU Monthly Support Fee: $50 – Waived 1 st 6 months
        • CU Earns $.50 per active card
      • FREE Internet Site
      • 4 FREE Monthly Customer Service Calls
      • Unlimited Loads
      • Loads and Monthly Fees to Members significantly lower than competition
      • CU can customize with their LOGO
    • CU MONEY – VISA Travel Money
      • $500 Implementation Fee – Waiver Extended thru 3/31
      • Price to CU: $2.00
        • CU Sets Price to Member - $3.95 to $7.95 avg
      • No Monthly Fees for CU
      • No inactivity fee for 1 st 11 months for member
      • FREE Travel Enhancements
      • FREE Internet Site
      • 4 FREE Monthly Customer Service Calls
      • Loads and Foreign Currency Exchange Rate to Members significantly lower than competition
      • CU can customize with their LOGO
    • CU MONEY – Gift Cards
      • NO START UP COST
      • Price to CU: $1.25
        • CU Sets Price to Member - $2.50 - $3.50 avg
        • Unlimited Website and VRU access
        • One Time Use – NO RELOADs
        • NO ATM Access
    • CU MONEY – 2008 Additions
      • Payroll Card
      • Family Card
    • CU MONEY Prepaid Debits
      • For Convenience
      • For Service
      • For Growth
      • For your Future………………….
    • Prepaid Debit A Real Solution For ALL Credit Unions!!