Prepaid card users, once considered too risky for remote check capture, are getting more access to the technology.
Technology vendor Fiserv is the latest to announce a check-capture product for prepaid card users.
"It became pretty obvious that this prepaid business was really one that was intriguing," says Gary Brand, director of source capture solutions at Fiserv. "The explosive growth in prepaid across all economic strata, but the difficulty of loading prepaid cards with funds, [showed us] there was a missing link."
Fiserv's Prepaid Source Capture, like the remote deposit capture technology banks use, allows consumers to capture an image of a check to commence a deposit.
Fiserv plans to market Prepaid Source Capture to processors and prepaid program managers, such as GreenDot and NetSpend. Fiserv will announce its first clients for this product in the next couple months, Brand says.
The risk factors for prepaid card users, who are often underbanked, are different from those of conventional bank customers. Underbanked consumers typically go to check-cashing stores for immediate access to funds, and they expect the same immediacy from mobile check deposit.
Many prepaid card users also treat their cards as disposable, so there is often a less committed relationship than there is with a bank customer.
Fiserv allows instant access to funds with Valid Systems' Web-based check guarantee service.
"It became evident that the market needed the capability to have immediate access to funds," Brand says. The fee charged for this service varies based on the program.
Fort Worth, Texas-based, Valid Systems scores requests for funds and determines whether it is willing to provide a guarantee on those funds. It provides its score within seconds.
Plastyc, a prepaid card marketer, addresses risk factors by using geo-location and phone calls to verify the depositor's identity and location. Technology provider Mitek provides the option to also scan a user's driver's license for authentication.
"Mobile check capture alleviates two fundamental problems with loading prepaid cards," says Jim Wells, president at Wellspring Consulting International.
The technology eases the pain of reloading funds and "encourages prepaid card holders to use their cards as virtual bank accounts by depositing the pay checks, etc. into the account as soon as they receive them," he says.
"Another obvious benefit of opting for mobile check capture is that it encourages consumers to select more sophisticated card programs, rather than the 'junk' programs that are all too prevalent," Wells adds.
At Plastyc, more than 75% of customers use smartphones, so mobile check capture could bring confidence to the market, said Jon Hennen, director of operations at Plastyc said at last year's Card Forum and Expo. Card Forum and Expo is hosted by SourceMedia, which publishes PaymentsSource.
Plastyc launched mobile check capture for its prepaid account in February. The feature allows cardholders to wait five days for funds without charge or pay a fee to receive instant access to check funds.