Suze Orman touts her new Approved card as a low-cost tool for people interested in building savings and a solid credit history. Russell Simmons’ pricier RushCard also offers tools for budgeting and saving, but it is more squarely aimed at consumers living paycheck to paycheck who want their money, and fast.

The two products’ key differences may go a long way toward defining where opportunities ultimately lie in the emerging, but somewhat troubled, prepaid debit card channel.

The shakeout of celebrity-linked prepaid cards has already begun (see story).

The arrival of Orman, who has built a reputation as a trusted financial expert, “changes the ball game,” Ben Jackson, senior analyst at Mercator Advisory Group, tells PaymentsSource.

“With Suze Orman entering the fray, this is the first time we’ve had a major media figure who is also a financial-advice guru offering a prepaid card that provides bank-like services,” he says.

Ironically, the very concept of Orman’s card suggests a bit of a disconnect, Jackson says, because it appears to build on her popularity among existing followers of her TV appearances and her website, where the card is heavily promoted.

“The main question is whether people who already follow Orman’s advice actually need a card instead of a bank to help them manage their funds,” Jackson says.

Competition between the two cards should be “interesting,” he notes.

RushCard welcomes it.

“We’re delighted Suze Orman has entered the category, as she’s a personal friend of Russell, and our industry is still in a very early stage, so there are many types of customers not properly being served by banks,” Rob Rosenblatt, CEO of UniRush LLC, which markets the card, tells PaymentsSource.

Major differences between the two cards so far are the monthly cost for each and access to customer service.

Orman’s Approved card, introduced Jan. 9, dangles a relatively low fee of $3 per month for basic functions, but users must beware of triggering a host of fees for such things as calling customer service more than once during each month (see story).  The card is a MasterCard-branded product issued by Bancorp Bank of Wilmington, Del.

The Approved card also comes with a free TransUnion credit-monitoring service, which automatically converts to $11.95 per month after the first 12 months. Customers may opt to cancel the service.

Simmons’ Visa-branded RushCard, launched in 2003, recently introduced new, lower monthly fees ranging from $3.95 to $14.95. Cardholders have unlimited access to customer service, and they make heavy use of it, Rosenblatt says. RushCard also offers discounts for certain merchandise purchases, including prescription drugs at participating pharmacies.

RushCard users typically call customer service at least twice per month, and their most common question is whether their direct-deposited paychecks have posted to their prepaid cards yet, Rosenblatt says.

This month, RushCard added a new feature at no extra cost that enables some customers to receive their paycheck funds up to two days before their actual pay date, he adds.

“Our customers constantly check the Web and call in to see if their paycheck has posted, and we want to get it to them as quickly as possible so they will be less likely to use expensive payday loans,” Rosenblatt says.

UniRush retooled its systems to receive advance notification of payers depositing employees’ funds, enabling it route early-arriving funds to cardholders’ accounts as much as two days before the actual pay date in some cases, Rosenblatt says. The company is promoting the new service to cardholders via text alerts and messages on its website.

Both the Approved card and RushCard go up against low-cost competitors, including the Green Dot Prepaid Card, which is free to consumers who deposit at least $1,000 a month and use in-network ATMs (see story).

The American Express Prepaid Card costs users $6.66 per month for those loading a $100 monthly allowance, with two monthly ATM withdrawals allowed (see story).  Prepaid card marketers may attract “unbanked’ customers, or they may poach bank customers fed up with fees, observers say.

But the path to profits for prepaid card marketers is not without obstacles, Jackson notes.

“The real struggle for all players in financial services is how can you offer basic banking services at a profit, and what fee structure is right,” he says. “Somehow you have to keep the lights on, and prepaid card issuers face the same challenge banks do in trying to offer a similar service with low or no fees. Competition is going to heat up, and some players won’t make it.”

Moreover, regulators are increasing scrutiny of prepaid card marketers, Jackson notes. “The regulatory environment is going to become more difficult for both banks and prepaid card operators,” he says.

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