Prepaid newcomer edoInteractive is looking to use the popularity of open-loop prepaid cards, social networking and mobile services among members of still-under-30 Generation Y to market the new prepaid card it began selling earlier this month.
CEO Ed Braswell tells PrepaidTrends he came up with the concept for the company and its products when his teenage daughter received several closed-loop retailer gift cards for her 17th birthday. He also tuned in to her avid use of social networking Web sites, such as MySpace and Facebook, and text messaging to connect with her friends.
The company launched the Facecard prepaid product earlier this month in the Nashville, Tenn., area, where edoInteractive is based. An undisclosed number of merchants are offering discounts and promotions for using the card. MetaBank, which is based in Storm Lake Iowa, issues the MasterCard prepaid card, and Houston-based FSV Inc. processes the card transactions for the issuer.
Along with the card, edoInteractive is offering a marketing platform merchants can use to market promotions via social-networking sites among cardholders.
The new company has tied its prepaid card to music festivals and to retailers near college campuses. It has struck deals with marketers to feature the card on 51 college campuses around the country, including the University of Tennessee, the University of Georgia, the University of North Carolina and the University of Texas, says Braswell.
"The important thing is that, rather than being a general purpose card, it's got a very hip spin to it that can attract throngs of people," says Brian Riley, research director of payment cards at TowerGroup, a Needham, Mass.-based consulting company owned by MasterCard Worldwide.
Braswell hopes the Facecard will tap the colossal Gen Y spending. He cites a November 2006 study by Resource Interactive, which reports that 82 million "millennials", or Generation Y individuals, spend an estimated $200 billion annually.
That leaves Gen Y wide open for prepaid products, says Riley. "The prepaid market is growing at such terrific rates," he says. "What really seems to work well are [products] for specific niches."
The card allows for "gifting," in which parents, other relatives or other cardholders may transfer funds from their bank accounts or their own Facecards to another cardholder to celebrate birthdays, holidays and graduation, says Braswell. He says the company's online initiatives to get members to use the person-to-person and gifting function, including marketing aimed at potential and established cardholders and parents. The company's deals with college market affinity partners also tout the function.
Riley says person-to-person loading is an essential facet to the success of the card. Regarding loading funds, Riley says young adults constitute one of the wealthiest markets. The group's spending power has legacy volume because parents are providing the funds, he says.
Another component of the card is the company's marketing platform, a system that enabless retailers to offer discounts to cardholders via the card network and social-networking Web sites. The company is seeking a patent for Prewards, a system that can pinpoint cardholder demographics and behavior to run a promotion, such as offering deals by ZIP code, gender and spending habits.
For example, the Noshville Deli in Nashville, Tenn., uses a Preward text message offering a $2 discount when cardholders make purchases at the shop. "The benefit for the retailer is having more-targeted marketing, which brings revenue back into the store," says Braswell.
EdoInteractive also is not missing a beat, literally, in hitting the Generation Y crowd where it spends time. Not only does it use the ever-popular MySpace and Facebook sites, but it also is using music festival promotions to drive interest to the card.
The company is a sponsor of the annual Bonnaroo Music & Arts Festival in Tennessee and is using messages and electronic invitations on sites to promote discounts at the event for food, merchandise and other services featured both online and at the festival.
"We're offering the first 10,000 Bonnaroo participants that sign up a $5 preward for T-shirts, food or other items," says Braswell, noting that the company signed a 12-month marketing contract with the festival and markets to Bonnaroo's database of 250,000 consumers. The company also is promoting the card at the Country Music Awards Fan Fest. Both events are scheduled for this month.