A dramatic shift is occurring in the composition of the U.S. population. The U.S. Census Bureau reported in May 2012 that from July 2010 to July 2011, minorities for the first time accounted for more births than whites, with Hispanics representing almost 26 percent of those births. It is evidence that financial service providers must account for this rise in the Hispanic population by offering payment services, namely prepaid cards, tailored to their financial needs and preferences.
Miriam De Dios, Chief Executive Officer at Des Moines, Iowa-based prepaid card program manager Coopera, said in a July 2012 webinar that prepaid cards are ideally suited to Hispanics. Half of all Hispanics in the United States are either unbanked or financially underserved, she said. In addition, De Dios noted the average age of individuals in the Hispanic community is 27, which makes the average Hispanic fall into a prime consumer demographic. Hispanics therefore represent "a blue ocean of opportunity for credit unions," she said.
Coopera, an Affiliates Management Co. subsidiary, partnered with payment aggregator The Members Group, also based in Des Moines, to offer the Visa Inc.-branded Coopera Card to the Hispanic community via credit unions. The card was rolled out in 2011 and is currently being offered by 11 credit unions located in the Midwest, Texas, California and on the East Coast.
The first key to reaching Hispanics with prepaid card programs is to make them culturally relevant and bilingual, according to De Dios. Coopera took a holistic approach to its offering, making sure each aspect of the program resonated with Hispanics.
"We have taken a look at this product from beginning to end – all the way from the card design to the language on the card," De Dios said. "These are the materials that your cardholder receives. All the way to the cardholder support, the text alerts that are provided, the statements. Everything is available in English and Spanish, and is culturally relevant."
The second key is to ensure the product is a better alternative to services offered by check cashers, according to Coopera. De Dios, a native of Jalisco, Mexico, illustrated how expensive check cashing is for the unbanked with her personal experience as a child.
"Every week I would go with my father to the check cashing outlet to get his complete paycheck cashed," she said. "Then we'd go somewhere else to buy money orders. I helped him fill out the money orders. And we'd get those to the utility companies. Sometimes we'd have to drive physically there to make those payments.
"And then we would go to a local grocery store that had a money transfer service. And that's what we would use to send money back to my grandma back in Mexico. So that was an expensive venture."
In a Coopera white paper entitled Prepaid Reloadable Cards Are Not Created Equal: Setting Your Credit Union's Prepaid Reloadable Products Apart from the Rest, De Dios detailed how the Coopera Card is an improvement over her childhood experience. While a check casher may charge 2 percent of the face value of a check to cash it, the Coopera Card offers free direct deposit of paychecks. Additionally, a check casher may charge $15 for a money transfer and $1 per money order, but Coopera offers free money transfers and bill payments. Coopera thus calculates its cardholders can save up to $792 annually over check cashing services.
That comparison is bolstered by news that financial planning website NerdWallet.com ranked the Coopera Card as the fifth most affordable prepaid card available to consumers, based on the card's low fees compared with other prepaid card options on the market, including two competing products designed for Hispanic cardholders.
The white paper stressed the goal of prepaid card providers – in this case credit unions – is to use prepaid cards to build long-lasting financial relationships with Hispanics. "While prepaid cards are well-suited to opening the door, they are not a magic bullet," De Dios said. "The trick to leveraging a prepaid product for true membership growth is to go beyond simply selling."
Providers do this through education. Because traditional financial services can be seen as intimidating, confusing and culturally irrelevant for Hispanics, prepaid card companies should ensure new cardholders understand the terms and conditions of programs, De Dios said. "But, more importantly, look for opportunities to teach them how to connect the product to their daily financial habits," she wrote.
De Dios added that a major fear among the underserved, in general, is that prepaid card fees will rob them of their hard-earned money. "The fear of fees is not unfounded, unfortunately," she wrote. Another fear is that prepaid cards will result in users incurring debt. "Obviously prepaid cards are designed to do the exact opposite," she said. "It's vital, however, that your staff be prepared to confront misconceptions that may seem apparent to them.'
In fact, such misconceptions represent engagement opportunities. It makes consumers' decisions that much easier when "your prepaid product compares so favorably to the other option available in the marketplace," De Dios said. 
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