As the prepaid market evolves, the networks processors use to support proprietary, closed-loop services use will be the next generation of networks best used to support alternative payments, contends T. Jack Williams, president of Dallas-based consultancy Paymentcard Services Inc. and a long-time player in the prepaid industry.
“As merchants look to reduce their cost of payment acceptance, they’ll need a network and they’ll need processors. Those processors that go from offering a gift card to becoming a provider of virtual cards that use the processing rails used for closed-loop gift cards will be the ones that succeed in the future,” Williams says. “The real opportunity is alternative payment strategies, whether mobile, key-entered or whatever.”
The big processors will win in providing open-loop card processing for payroll and government prepaid initiatives because they have the credibility and breadth of functionality that open-loop clients will require. As such, smaller, closed-loop processors need to look for other markets to compete, Williams says.
“There’s a whole world of virtual accounts in the multimerchant environment,” he says. “Whether that’s a township with a vision to use a parking card to drive sales for downtown merchants or some other strategy, alternative payment strategies that run on existing closed-loop rails will be the opportunity of the future. You have to have the expertise and understanding of the prepaid world, both physical and virtual. It will require a high understanding of the payments infrastructure to win in the years ahead.”
For the full interview with Williams, click here.
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