MasterCard Inc. is preparing to address what many card executives call prepaid's No. 1 problem: consumer awareness.
The payments network is planning to unveil a consumer advertising campaign this spring, including television commercials, to promote reloadable prepaid cards to a larger audience.
The campaign's slogan, "Everyday Prepaid," is meant to demystify the cards, which often are referred to with such decidedly uncatchy labels as "general-purpose," "network-branded" or "stored-value reloadable," says Laura Kelly, MasterCard senior vice president of global prepaid solutions.
"Obviously consumers many times don't understand what a GPR is. ... 'General-purpose reloadable prepaid' just doesn't roll off my lips, and I'm in the business," Kelly says. "We really did try to say, 'What's the simple answer and the simple way to describe this product?'"
Executives at prepaid debit card companies and industry analysts have said the recession is broadening consumer demand for the cards, which can enable both underbanked and credit-deprived customers to pay with plastic instead of cash. A recent survey of prepaid card executives found many are wondering why the major payment networks, with their large marketing budgets and omnipresent TV commercials, have done so little to mention prepaid in those ads.
Visa Inc. has run television spots for prepaid products in the past, but it is not currently running any such commercial and has no prepaid-specific television campaign planned, according to Hyung Choi, Visa senior business leader for prepaid products.
"What we've done in the past, and we've done this for a couple of years now, is to run a very specific general-purpose reloadable spot in several key markets across the U.S. to drive awareness and to drive acquisition of the product," he says. "We will continue to evaluate the use of this tool to drive further awareness and education of the product in the marketplace, but that's going to be just one of the components."
Visa's prepaid marketing strategy hinges on in-store and online promotions, such as signage or tax-time refund sweepstakes, with its partners, Choi says.
Kelly would not state specifics about the MasterCard's campaign, such as its start date, cost or scope, except to say it will be "multichannel."
"It's incumbent on all of us to make investments in the space," she says. "The majority of the spend on that card is kind of everyday spend. The purpose is to actually focus on everyday prepaid and for people to connect the prepaid category with things that they use it for every day."
The March survey of executives from 21 prepaid companies by Boston-based consulting firm Aite Group LLC found many such executives are frustrated by the networks' lack of investment in television advertising for prepaid.
The report, published last month, said 65% of respondents mentioned "education, awareness or demand cultivation" as one of the biggest challenges facing the prepaid industry.
"On the awareness front, a recurring theme is card networks not doing enough to promote prepaid cards, in particular in their TV commercials, which highlight credit and debit but fail to mention prepaid cards," the report said.
Gwenn Bézard, research director at Aite and the report's author, says the MasterCard campaign will earn a lot of good will-and potentially more business-from prepaid companies. The benefits of MasterCard's campaign will extend throughout the industry, perhaps even to its competitors, he predicts.
"At the end of the day it's going to help generate higher awareness. From what we have seen, when you have those types of commercials, it's going to lift everyone," he says. "It's going to help Visa as well; I do think there is some halo effect, but from an overall competitive standpoint it can only make MasterCard a stronger brand."
Bézard expects Visa eventually to follow MasterCard by introducing more prepaid-related commercials, adding that the benefits to MasterCard of being first with such a campaign could be limited. "I'm stopping short of saying it might hurt Visa because prepaid is still small," he says. "You need a lot of transactions to make a difference."
Mick Conlin, senior vice president of agent products at Meta Payment Systems, a unit of Meta Financial Group Inc. that helps other financial institutions market prepaid cards issued by the Storm Lake, Iowa-based company's MetaBank, welcomed news of MasterCard's planned television campaign.
"Additional exposure for the industry is fantastic, and it's a sign that the industry's grown up," he says. MetaBank issues prepaid cards with the Visa, MasterCard and Discover Financial Services brands.Conlin does not blame the networks for not doing more sooner on television. "Doing television is extremely expensive, and at this point in the industry's life cycle, [the question is still] whether or not the return is going to justify the expense," he says. ATM