Stored value and prepaid card solution provider nFinanSe Inc. kicked off 2009 with the launch of a low-cost, reloadable prepaid card at a discount retailer and a supermarket chain. The program covers a broad swath of the United States.
The Discover Financial Services-branded card has been rolled out to Winn-Dixie Stores Inc. supermarkets in five southern and southeast states and to Dollar General Corp. stores in 35 states - over 9,000 locations in total. According to nFinanSe, the card is designed to be an affordable payment alternative for unbanked individuals who have no access to credit cards or for consumers with credit who are struggling with finances.
"Considering the current economic climate, with record home foreclosures, tight credit and high banking fees, unfortunately this unbanked demographic will be increasing," said Clare Morgan, Vice President at Tampa, Fla.-based nFinanSe. "We know that our reloadable cards will save unbanked and financially struggling consumers money and improve their quality of life."
According to Morgan, the nFinanSe Discover cards enable consumers to make purchases online or at brick-and-mortar stores, use ATMs, pay bills and transfer money. It is a better solution than "trying to live out of the cash that they are carrying around in their pockets," she said. "It's like having a walking bank account."
NFinanSe touts its new card as having the lowest fees in the payments industry. The company said its competitors may charge consumers as much as $14.95 to purchase an open loop, network-branded prepaid card at the POS; $4.95 in monthly account maintenance fees; another $4.95 to reload cards; and $2 for customer service calls.
In comparison, nFinanSe said its card costs $5.95 to activate, with a monthly maintenance fee of $2.95, a reload fee of $2.95, and free customer service calls. NFinanSe is able to reduce costs for consumers due to many factors.
"Because we developed our product a little later than our competitors, we have affected a 'Southwest Airlines' model," Morgan said in reference to the discount airline. "We developed our product for the mass market, the 73 million unbanked and underbanked. We developed everything ourselves. We built it to be simple but consistent and elegant. And we didn't have the legacy development costs of our competitors." Additionally, cardholders can receive e-mails or text messages on their cell phones with transaction and balance information after every card use. The company estimates its new card may save consumers over $500 million a year in fees.
The Wall Street Journal reported that, after years of rising U.S. household debt levels, the Federal Reserve noted that the average amount of household debt declined in the third quarter of 2008. Economists expect that rate to continue to decline by 3 percent to 5 percent in 2009.
As consumers tighten their financial belts and save more of their income, nFinanSe believes prepaid cards will be the beneficiary of this new frugality. Consumers will rely less on credit cards and more on debit and prepaid cards as budgeting tools.
"In a country accustomed to plastic and other forms of electronic payments, reloadable cards are the key for Americans to continue buying goods and services in stores and online," said Jerry R. Welch, Chairman and Chief Executive Officer at nFinanSe. "Our reloadable card empowers consumers to get the most for their money in the worst economic slump in modern times."
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