The uses for prepaid cards are expanding, creating fresh opportunities for financial institutions that may have earlier dismissed the product as a tool for the unbanked, said Michael Fiore, who becomes MasterCard's group executive of global prepaid solutions on Jan. 15.
Fiore, whose earlier roles at MasterCard covered cross-border remittance, person-to-person payments and disbursement strategies, will lead the development of MasterCard's global strategies for the prepaid card segment. Fiore, who also played a role in MasterCard's acquisition of Orbiscom and its launch of inControl, replaces Ron Hynes, who recently left MasterCard "to pursue a new opportunity," according to a Jan. 13 press release from MasterCard.
Fiore will assume his new role at a time when a number of technology and marketing companies are using prepaid cards as a gateway to broader financial services and a potential way to lure consumers away from banks. But banks can fight back by playing an active role in prepaid product development, he said.
"There's a lot of roles to play in prepaid, and financial institutions have to be a part of it," Fiore said. "And there is an opening for them to go deeper."
In addition to the general purpose reloadable cards sold at drug stores, banks can offer employee benefit cards, payroll cards, travel cards, government disbursement cards and gift cards.
Companies such as Moven, Green Dot and UniRush emphasize prepaid accounts as a portal to offering other financial services. American Express and mobile carriers such as T-Mobile are also pursuing the prepaid card market.
Consumers with traditional banking relationships could make use of prepaid cards for travel or for sending money to kids in college, Fiore said. "There are also a number of use cases with benefit cards, health savings accounts, and gift cards."
MasterCard didn't provide a specific timeline for any planned product deployments, though Fiore said the card network is working to provide prepaid capabilities "beyond the standard platform."
"Our vision is for a world that is beyond cash, where consumers can have confidence in a safe way to participate in financial services," he said. "Prepaid is available for just about any kind of payment need. It has the ability to provide solutions for those outside the banking system as well as provide for the needs for those inside the financial mainstream."
Payroll cards can be part of that strategy, even though they have been criticized by regulators and consumers who say the product charges fees to workers to access their own paychecks. The counter argument is payroll cards can increase participation in the underbanked community.
MasterCard tightened standards for payroll cards about a year ago, and Fiore sees payroll cards as part of a broader bundle of services.
"Providing a payroll card is part of providing a financially inclusive product for consumers, or a more efficient way to get their pay," Fiore said. "It has to come along with education for consumers who are not used to dealing with an electronic financial instrument."