The expo offered a wide ranging schedule of keynote addresses, panel discussions, breakout sessions, networking opportunities and exhibitor connections. The mood on the tradeshow floor was decidedly optimistic, with the industry expanding in multiple directions, including growth in general purpose reloadable (GPR), payroll and virtual gift card adoption.
The closed-loop virtual gift card space may be the fastest growing segment within prepaid, and a topic of much discussion at the show. David Stone, Chief Executive Officer at mobile gifting firm CashStar Inc., said digital gifting is in its infancy. He noted that only 1 percent of all consumers purchase digital gifts, but that an estimated 40 percent of consumers under the age of 40 will do so. Like Stone himself, who "lives" on the virtual horizon, younger consumers who inhabit the expanding world of mobile devices will drive exponential growth in virtual gifting in the coming years.
However, Stone believes the true sweet spot for the sector is not on the smart phone, but on the tablet. At the expo, CashStar demonstrated a tablet-optimized mobile app currently in beta mode that takes advantage of the more spacious dimensions and denser screen resolutions of tablets, not to mention their popularity as leisure devices. "People are using tablets on the weekends for their entertainment, their shopping, their browsing," Stone said. "It's not a 'tweener.' … It's its own thing. We are taking advantage of that special form factor."
Tablet users will be able to embed photos and videos in their digital gifts using the app, Stone added. "You can do it with a phone, of course, but the tablet makes the experience richer and bigger," he said.
The optimism that pervades the industry is tempered by the specter of government regulation. Several sessions were devoted to the complex and often murky regulatory landscape. One issue addressed by panel discussion moderator Judith E. Rinearson, Partner at the law firm of Bryan Cave LLP, encapsulated the industry's fear that heavy-handed federal regulations will undermine the prepaid card sector's growth.
Rinearson told Marla Blow, Assistant Director, Card and Payment Markets, at the Consumer Financial Protection Bureau, that the industry supports efforts to make card programs as transparent and user friendly as possible for consumers, but that stakeholders as a whole are "very concerned" that the CFPB will dictate what fees providers can charge.
Blow replied that the CFPB has noted fees have fallen in recent years, in part due to competition and market dynamics, and without need of government intervention. "We don't really see it as our role to try to set fees," she said, adding that arriving at a "magic number" at which to cap fees would be "very difficult" to achieve. It would not have been surprising, nor unjustified, if a collective sigh of relief had arisen in the auditorium.
A keynote address by Jay Heinrechs, author of Thank You for Arguing: What Aristotle, Lincoln and Homer Simpson Can Teach Us About the Art of Persuasion, provided a perspective on how to steer arguments, or broader dilemmas, toward favorable conclusions by employing "the pivot." He said verbal arguments between people are usually stuck in the past tense, where blame is assigned and rehashed over and over.
The solution, according to Heinrichs, is to pivot arguments from past tense (where mistakes occur) into future tense (where mistakes will not occur again). Heinrich demonstrated the technique by recounting an argument he had with his son over toothpaste. Heinrich accused the boy of using up the toothpaste, to which the boy sarcastically replied, "'That's not the point, is it, Dad? The point is how are we going to keep this from happening again.'"
The pivot may be a technique ISOs and merchant level salespeople can employ to reframe and redirect disagreements they have with merchants toward more favorable outcomes.
The expo concluded with a talk by basketball legend and entrepreneur Earvin "Magic" Johnson. Despite being world famous, a successful businessman with Magic Johnson Enterprises, and a respected leader in the black community, five banks declined the opportunity to sponsor the Magic GPR card, he said. But the sixth bank, OneWest Bank FSB of Southern California, did not.
The result is that financially underserved individuals in urban communities have a product they can use to become a part of the financial mainstream and experience the American Dream, Johnson said.
It was fitting that Johnson brought the expo back to one of its primary missions – providing the approximately 60 million unbanked and underbanked U.S. consumers with alternative financial products. On the expanding pond of the prepaid card industry, there are a lot of ducks to feed.
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