Prepaid Debit  A Real Solution For Credit Unions  January 31, 2008 Presented by:  Patty Smith
Topics of Discussion <ul><ul><li>What is a Prepaid Debit Card? </li></ul></ul><ul><ul><li>How does it work? </li></ul></ul...
Topics of Discussion <ul><ul><li>Why should I care? </li></ul></ul><ul><ul><li>What’s available to me? </li></ul></ul><ul>...
<ul><li>Prepaid is a Debit CATEGORY </li></ul><ul><ul><li>Account or Card is PRE Funded </li></ul></ul><ul><ul><li>Transac...
<ul><li>Non Reloadable - Typically Instant Issued </li></ul><ul><ul><li>Gift – One Time Usage </li></ul></ul><ul><ul><li>C...
Reloadable:  Segment Market <ul><ul><li>General Purpose Cards  </li></ul></ul><ul><ul><ul><li>Everyday Spending  </li></ul...
Prepaid Debit Overall <ul><li>The 3 rd  Evolution of the Card Payment Business:  </li></ul><ul><ul><li>Credit  - Pay Later...
Prepaid Debit - Mainstream  <ul><li>2007 Year End Estimates </li></ul><ul><ul><li>Greater than 7 Billion Transactions </li...
<ul><li>Easy to understand and use for Consumers </li></ul><ul><ul><li>Accepted and works like a reg Debit Card </li></ul>...
Benefits of Prepaid  <ul><li>Convenience </li></ul><ul><li>Control </li></ul><ul><li>Security </li></ul><ul><li>Privacy </...
PLASTIC IS KING!!
Marketplace – Who is offering? <ul><li>Green Dot  </li></ul><ul><li>H&R Block  </li></ul><ul><li>Retailers: </li></ul><ul>...
GREEN DOT <ul><li>First ever Prepaid cards sold at neighborhood retailers with worldwide MasterCard ®  Debit or Visa ®  De...
GREEN DOT <ul><li>Costly for Consumers </li></ul><ul><ul><li>$9.95 avg Retail </li></ul></ul><ul><ul><li>$2.50 - $4.95 avg...
H&R Block  - Emerald Savings TM <ul><li>Prepaid MasterCard </li></ul><ul><ul><li>Available to tax clients only  </li></ul>...
Wal-Mart and Target  <ul><li>2 of the 5 largest Retailers on the band wagon! </li></ul><ul><ul><li>Collectively : $150 Bil...
Capital One – Decoupled Cards <ul><li>No need to open NEW checking or move Direct Deposit </li></ul><ul><li>Debit Transact...
IMPACT TO CREDIT UNIONS <ul><li>Loss of Debit Interchange Income </li></ul><ul><li>Loss of Deposits - Deposit Income </li>...
Ignoring Prepaid Debit: <ul><li>The biggest threat our Industry has seen to date:  </li></ul><ul><ul><li>18.8% of CU’s Non...
John F Kennedy, April 12, 1959 <ul><li>The Chinese use two brush strokes to write the word “CRISIS”.  One brush stroke sta...
Deciding WHAT to offer <ul><li>Convenience Services:  Not a Main Product </li></ul><ul><ul><li>Gift Cards </li></ul></ul><...
Deciding WHAT to offer <ul><li>CUSTOM Programs </li></ul><ul><ul><li>CU Manages Program- Plastics, load sites, CS </li></u...
CU MONEY – Everyday Money <ul><li>$500 Implementation Fee –  Waived thru 3/31 </li></ul><ul><li>Price to CU:    $2.00 </li...
CU MONEY – VISA Travel Money   <ul><li>$500 Implementation Fee –  Waiver Extended thru 3/31 </li></ul><ul><li>Price to CU:...
CU MONEY – Gift Cards <ul><li>NO START UP COST </li></ul><ul><li>Price to CU:  $1.25 </li></ul><ul><ul><li>CU Sets Price t...
CU MONEY – 2008 Additions <ul><li>Payroll Card  </li></ul><ul><li>Family Card </li></ul>
CU MONEY  Prepaid Debits <ul><li>For Convenience </li></ul><ul><li>For Service </li></ul><ul><li>For Growth </li></ul><ul>...
Prepaid Debit  A Real Solution For ALL Credit Unions!!
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Pre Paid Debit Cards By ILCUL

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Pre Paid Debit Cards By ILCUL

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

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