Tampa, Fla.-based nFinanSe Inc. made news in the past months by lowering the activation fees on its general purpose, reloadable (GPR) prepaid cards and leveraging its distribution channels to launch a payroll card program targeted at unbanked consumers.
Now nFinanSe has struck a deal with the American Express Co. to offer, sell and distribute AmEx gift cards to retailers. Jerry R. Welch, Chairman and Chief Executive Officer at nFinanSe, knows of no other arrangement in which a card brand has contracted with a program manager in a similar fashion.
"Traditionally [AmEx] have handled all the sales functions themselves, going out, talking to retailers, getting distribution on their cards," Welch said. "So we're really delighted and honored to now be offering their cards to the marketplace. It's certainly unique for them and it's certainly unique for us."
Welch believes AmEx chose nFinanSe because of its national footprint, innovation and compatible business philosophies. He said nFinanSe's decision to reduce card activation fees to rival Wal-Mart Inc.'s is one way the company has differentiated itself from its competitors.
"They like what we're doing in the marketplace," Welch said. "They see how innovative we've been. I think we share a mindset about the future and direction of this industry."
The mindset Welch refers to places an emphasis on customer service. A large part of that emphasis is understanding how retailers think. nFinanSe has that knowledge because many of its executives have backgrounds in retailing and consumer marketing, including Welch.
In the 1980s, Welch ran the third-largest convenience store chain, National Convenience Stores Inc., based in Houston. He also headed toy store chain FAO Schwartz in New York. "I've sold everything from $1 long-neck beers to $2,000 toys and everything in between," Welch said. "We understand the retailer. ... When we go in and talk to retailers, we understand what they're doing. We think that's an advantage for us."
In January 2009, nFinanSe launched its Discover Financial Services-branded GPR cards. And the company just announced it will begin to offer Visa Inc.-branded reloadable prepaid debit cards in Winn-Dixie stores starting December 2009. With the addition of AmEx, nFinanSe has agreements with three of the top four card brands - a circumstance Welch claims is unique to program managers.
"That gets back to knowing retail," he said. "There's an old saying that retailers learned a long time ago, that selling two brands will always get you more sales than selling only one of either brand. So the point is that a rising tide lifts all boats. If consumers come in and see you've got choice and selection, then they think you have a full assortment and you'll get more business.
"In our case, we just want to be able to offer a full assortment for all those retailers."
Welch expects to expand AmEx's footprint beyond the 60,000 stores that the card brand's gift cards are already in. "There's lots of other retail stores [where] this American Express gift card should be going," he said.
Beyond supermarkets, drugstore chains, general merchandise retailers and convenience stores, Welch eyes specialty retailers as a new market for AmEx cards, because merchants can take advantage of impulse purchasing behavior using gift cards.
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