Walgreen Co. plans to expand the payments features of its combined loyalty and prepaid MasterCard, Balance Financial, with the goal of making it the preferred financial product of its underbanked customers.
Balance Financial "is not just a prepaid card we can be a destination for these customers' financial service's needs," says Dan Morrell, assistant treasurer at Walgreens, at the National Retail Federation's 103rd annual convention and expo this week.
"Today [Balance Financial] is a prepaid card. In the very near future it'll be a card that gives customers the opportunity to get direct deposit to it or to put their tax refund checks on it," Morrell says. Walgreens also plans to add a money transfer capability and bill pay services to the prepaid platform, he says.
The prepaid card connects with Walgreens' current loyalty program, which has 74 million active users, says Morrell.
"We're partnering loyalty with payment to treat it more as a preferred payment method," Morrell says. The Balance Financial Prepaid MasterCard "allows prepaid customers to earn bigger rewards than just regular Balance rewards users."
Morrell says the company is targeting the underserved market, which already shops at its stores. Walgreens doesn't see big-ticket purchases, but it makes a lot of smaller sales, and its customers are very loyal, he says.
"It's crazy what some of these people will do for services that we take for granted," says Morrell. Underbanked consumers are sometimes excluded from the digital economy because they can't get credit or debit products, so they'll borrow a neighbor's card to buy online, he says.
Morrell used to work for a man who was a bit of a philosopher, who told him, "At some point in the future all consumers will use 10 apps or less to manage our daily lives."
Walgreens is trying to create an app that can be one of the few apps a consumer will need, Morrell says.
To reach this goal, the company is tying into third parties' application programming interfaces (APIs). For example, Walgreens is integrating into photo apps, so it can then allow users to send their photographs to Walgreens to be developed, Morrell says.
In 2012, Walgreens bought a 45% stake of Alliance Boots, a European pharmacy retailer. Walgreens will have the opportunity in February 2015 to buy the remaining stake of Alliance Boots to bring the two companies together, Morrell says.
"It's not often that you work for a company as old as Walgreens that's still trying to reinvent itself," he says. The acquisition is a part of the company's strategy to establish an efficient global platform, he says.
Morrell spoke during a panel discussion alongside executives representing Saks Fifth Avenue and Bass Pro Shops, who discussed their own strategies for combining loyalty and payments.