JetPay Card Services has started a soft launch of a general purpose reloadable prepaid card, the first venture under a new leader in its young prepaid division.
Payments industry veteran Ralph Bianco recently joined Berwyn, Pa.-based JetPay Card Services, a unit of JetPay Corp., as its executive vice president to oversee the company's new card offering. JetPay plans to promote the new prepaid card as a more versatile option for consumers who may have only been exposed to employer-issued payroll cards and similar products.
JetPay wants to promote consumer choice as a key feature of the general purpose card, Bianco says.
"I mean choice in the broadest sense possible," Bianco adds. "We would never want to get into a position where an employer was mandating deposits to our card. Even if that were legal, it's not wise."
It is too early to reveal specifics about fees for the Visa-branded card, but any fees will not be a barrier to obtaining or using a card, Bianco says. In addition to the card services business, JetPay also has merchant services and payroll divisions.
Prior to taking on the vice president role at JetPay, Bianco spent portions of his 39 years in the payments industry in executive roles at U.S. Bancorp, MasterCard, Gensar Technologies and Genpass Technologies.
Through that experience, Bianco says he learned a prepaid provider cannot "club consumers over the head with fees, especially to obtain the card." More often than not, consumers unhappy with fees will reduce the frequency of their deposits, he says.
"In studying millions of cards in the past, and reviewing my own portfolios, I can see what deposit attrition looks like," Bianco says. "On the credit card side, people always used to focus on account attrition, but I learned over time that balance attrition always occurs first."
With prepaid, if the consumer's historical load activity starts to tail off, "that consumer is telling you something, maybe not verbally, but their actions are speaking," Bianco says.
JetPay will initially rely on its internal distribution channels and will add independent sales organizations, contractors and retailers as distribution partners as the product grows, Bianco says.
For now, the JetPay cards will continue to use magnetic-stripe technology, rather than chip-based EMV smartcard technology, which the card networks expect most retailers to accept by October 2015.
"There is no benefit in investing in smartcard technology for a prepaid card program when targeting underbanked consumers anyway," Bianco says.
In general, Bianco says he would not consider himself a champion of the U.S. shift to smartcards without a more thorough examination of other potential options.
"EMV has been around 20 years and is ready for its next evolution," Bianco says. "Up to 60% of consumers have smartphones, so shouldn't we be looking at that?"
There is a lot of uncertainty in the payments industry over whether to switch to EMV cards or whether to devote resources to mobile payment methods such as Near Field Communication, Bianco says.
JetPay should be able to ride on the wave of popularity prepaid cards currently enjoy with consumers, but may encounter headwinds from the regulatory and compliance environment. Most recently, Virginia Sen. Mark Warner has called for the Consumer Financial Protection Bureau to demand even more fee disclosure from prepaid card marketers.
"The not-so-obvious problem with the regulatory and compliance environment is that it stifles innovation," Bianco says. "It makes everyone a process bureaucrat, with no balance for the allowance of common sense, substance and context, for fear an auditor won't like the way something looks or sounds. It could be a killer of the business."
JetPay is proud of its launch strategy, which focuses on delivering a high-value product in a consumer friendly way, Bianco says. Specifically, the company wants to stress low cost and clear disclosure of fees, terms and conditions, he adds.
"But in general, I feel very strongly that it never does a business good by not disclosing the terms because when the system [government] comes to correct, they always overcompensate," he says.
In 2012, Universal Business Payment Solutions Acquisition Corp. purchased JetPay LLC and its credit and debit card processing operations to create a company that would operate as a full payments service provider for small businesses.