It would seem like a chilly time to roll out a new prepaid card program, with formal regulations in the works for an industry that’s been under escalating scrutiny around fees and customer service. But that doesn’t faze Texas entrepreneur Houston Frost, who has relaunched the Akimbo reloadable prepaid card—a concept he’s championed since 2011—with new banking partners and a multi-pronged marketing approach.

The product is repackaged, but its core selling point remains the same as it was four years ago: Akimbo targets consumers who want to use a prepaid card—or several—in addition to a regular checking account to make recurring payments to friends, family and service providers.

“The main thing setting Akimbo apart from other prepaid cards is we’re not going after unbanked customers,” Frost said. “Our target market is people with cash flow who want a convenient way to send money to people around them for gifts, allowances, babysitting and everything else that happens in your everyday life.”

There are two pain points in mobile P2P, and prominent apps like PayPal's Venmo have succeeded in removing the consumer-facing friction by redesigning the interface to resemble a social media app. Despite this progress, Frost insists that there is much left to fix under the hood of most P2P apps.

“We see an opportunity to help people who have recurring payments for people in their immediate circle, who don’t want to use new services like Venmo and Square Cash where there’s no immediate access to the cash,” Frost said. “With Akimbo, the recipient gets the money immediately, which they can spend anywhere, convert to cash from an ATM, or transfer to a bank account, all through the familiar mechanism of a payment card."

This setup differentiates Akimbo from other P2P apps where funds are held in a virtual account or transferred to a checking account, Frost said. The company's revenue will come from various fees—users pay $5 for each sub-account they create for recipients—and from interchange driven by card spending, Frost said.

Frost’s 2011 attempt to get Akimbo off the ground by marketing it on Facebook achieved some initial success, resulting in enrollment of about 70,000 consumers. Users notified recipients by sending invitations through the social media network, and the company also sought banks to issue a card, but those efforts were unsuccessful and Akimbo’s growth stalled.

In December of 2014, Frost found new backers for the startup concept—originally funded by local investors—when San Antonio-based Payment Data Systems Inc. acquired the assets of Austin, Texas-based Akimbo Financial Inc., for $3 million in stock and cash.

Payment Data Systems, a NASDAQ-traded company with headquarters in San Antonio, sees promise in the Akimbo concept, adding the efficiencies of its own financial services marketing and payment-processing resources. As part of the deal, Akimbo transitioned from a Visa product issued by The Bancorp Bank to a MasterCard product issued by St. Paul, Minn.-based Sunrise Banks N.A. with about 25,000 active accounts, completing the process in June 2015.

Sunrise is known for its willingness to experiment in the prepaid card market. Its other offerings have included the True Link Prepaid Visa card for seniors, the MyPlash Prepaid MasterCard for teens, a combined debit and government ID card for the city of Oakland, Calif., and the notoriously short-lived Kardashian Kard.

Bringing Akimbo and Payment Data’s payment processor under one roof does more than just lower costs, Frost said.

“It’s hard to innovate when you have to go through third parties for every change you want to make in the platform,” he said. “Now that the same company that owns Akimbo also owns the processor, we have full control of the technology stack, which is a huge advantage.” Frost, formerly the president and CEO of Akimbo, is now senior vice president of corporate development and prepaid products for Payment Data Systems.

Akimbo expects its reloadable prepaid card to benefit from another product, Akimbo Gift, which it begins marketing this week. Gift card buyers can opt to have the card sent by traditional mail or delivered by email as a virtual card for online purchases.

The gift card's recipients can opt to upgrade to a reloadable prepaid account on Akimbo’s platform, carrying over the gift card balance while adding the ability to reload funds, withdraw cash at ATMs and make P2P payment to other Akimbo cardholders.

The major challenge with this approach, observers says, is the same one Akimbo faced four years ago: Without a partner or other mechanism to build scale on a mass basis, growth could be slow and costly. The company hasn’t ruled out trying to market Akimbo through banks, but has not entered any such marketing agreements so far.

Akimbo’s relaunch is also complicated by the overhang of the CFPB’s proposed regulations for prepaid cards, which could include hefty disclosure requirements for any prepaid card that functions as a bank account, said Ben Jackson, a director with Mercator Advisory Service.  

“Before the CFPB reveals the final rules, it’s unclear how much disclosure will be required for companies offering products like Akimbo, but there’s a good chance the disclosure burden will be onerous, which could make marketing a product like this more difficult,” Jackson said.

Still, Frost’s brainchild holds some appeal, said Jackson. “Sending a gift card that converts to a reloadable prepaid card is an interesting idea, and it helps resolve the core problem with prepaid cards, which is their typically short lifespan,” he said.

Mercator’s research suggests that consumers typically use a prepaid card for about six to nine months if they reload it with cash, and for 18 to 24 months if they use it for direct deposit. “Profitability with these cards depends on longevity of the account, so anything you can do to prolong usage is good,” Jackson noted.

And Frost, undeterred, said Akimbo is versatile enough to work under any regulations that emerge.

Akimbo is simultaneously launching Akimbo Now as a business-to-business product with support for incentives and rewards, using its platform and API. “With Akimbo Gift and Akimbo Now, we’re building a network around the cardholders themselves, and the more users participate, the more valuable it becomes to those users,” Frost said.

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