The prepaid card segment of Western Union Holdings Inc. was busy this month, with the launch of a reloadable card in the Philippines and deals to distribute cards with U.S. retailers Dollar General Corp. and Fred's Inc.

And earlier this year, Western Union announced a distribution deal with 7-Eleven.

The company's core business remains the transfer and reception of funds, but that is not a daily activity for most consumers, says Michael Hafer, Western Union's senior vice president of global prepaid. By providing a card and account for daily use, Western Union can strengthen the brand and relationship with customers, he says.

A prepaid cardholder also lifts transfer and remittance business 10% to 15%, Western Union research shows.

"It's a great complementary thing to offer these additional products and services to the existing Western Union customers, but also to a broader base that might be interested in these products to bring them into the Western Union franchise," Hafer says. "The more products and services we can deliver that meet customer needs, the stronger the loyalty we drive with our overall customer base."

Though the prepaid segment accounts for 1% of Western Union's overall revenue, the goal is to have its contribution grow at a 20% annual clip, he says.

"We're very bullish," says Hafer of prepaid. On July 24, company executives said prepaid revenue increased 6% in the second quarter compared with a year earlier.

The Western Union Gold Prepaid Card, driven by partnerships with UnionBank and Visa Inc., launched in the Philippines July 24. Consumers may reload the card account via text messaging, a phone call to customer service, in person at a Western Union location or online.

The Philippines is the first Asian market and ninth market overall for Western Union prepaid products and services, joining the U.S., United Kingdom, El Salvador, Germany, Panama, Peru, Austria and Argentina.

Western Union's aggressive distribution moves are in line with the competition, which includes Green Dot Corp. and NetSpend Corp., says Aite Group senior analyst Madeline Aufseeser. Each is seeking more locations to expose shoppers in all channels to their products.

Aufseeser predicts that smaller companies will be squeezed out by larger rivals, and sees a couple of keys to long-term success of prepaid and reloadable cards. One is the number of distribution outlets, while the other is convincing the public to use the cards on a regular basis.

"These issuers and program managers need to put marketing spend, if they haven't already, towards retention and usage programs and get the life of these cards to be extended much longer," she says.

Kartik Mehta, a research analyst with Northcoast Research, says Western Union has two strengths in the reloadable prepaid card battle: its network and its brand.

"They have a product that is in demand not only domestically but internationally," says Mehta. "They're one of the few companies that can do that."

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