Western Union Co.'s plan to offer consumers an overnight prepaid card-delivery service may help increase awareness of prepaid products, observers say. The service enables consumers to send funds via a Visa-branded prepaid debit card that consumers can deliver overnight to recipients throughout most of the country.

"It also allows us to provide our recipients with a great financial tool when it comes to spending and managing their money," Michael Hafer, Western Union vice president of U.S. product management, tells ATM&Debit News.

Western Union is piloting the service, which features the MoneyWise card, in St. Louis and soon will extend the test to Kansas City, Mo., he says. The company is touting the convenience of the card, Hafer says. The recipient has the option to upgrade the MoneyWise card to a reloadable product.

Western Union is using the pilot to gauge consumer feedback and perceptions about the service before offering it nationwide, Hafer says. The company has 44,000 locations in the United States.

MoneyWise availability may expand to yet another 8,500 locations Jacksonville, Fla.-based Fidelity National Information Services Inc. has agreed to offer its bank clients Western Union's remittance services. Last month, U.S. Bancorp announced it would offer Western Union's services at all its branches.

 "This is a unique model for a remittance product that helps to introduce Western Union's [prepaid] product to the market," Brent Watters, senior analyst with Maynard, Mass.-based Mercator Advisory Group Inc., tells ATM&Debit News. "There is merit to what they are doing in expanding their cardholder base."

To send the prepaid card, the sender still needs to visit an agent location to load funds into a MoneyWise card account. The recipient activates the card by phone using a funds transfer control number, which comes packaged with the card.
It is at that point the receiver has the option to upgrade the card to a reloadable product. The receiver would use the same card. "It's the delivery mechanism that really makes the service a lot more convenient for both senders and receivers," Hafer says. "With this service, we take the burden off the recipient to find an agent location."

The sender pays a one-time $9.95 Federal Express Corp. overnight-delivery fee plus a Fed overnight home-delivery fee of $9.99 to send up to $200. The fee, based on a percentage of the funds, increases as more funds are loaded.

Otherwise, the prepaid card rates are comparable with sending a standard Western Union funds transfer. Western Union charges $9.99 for up to a $200 next-day transfer. A same-day transfer costs $14.99. With the MoneyWise service, the sender is paying the additional fees for the convenience of the recipient receiving the card, Hafer says.

"If this drives adoption and greater awareness of [general-purpose reloadable] cards, then it could be a valuable and logical step for Western Union in terms of integrating prepaid into their dominant business," Rachel Schneider, innovation director at the Chicago-based Center for Financial Services Innovation, tells ATM&Debit News. The center is a nonprofit arm of ShoreBank Corp.

Western Union carefully determined the fee structure to make the card more attractive than other prepaid cards in the market, especially for recipients, Hafer says.

The company did not want the fee structure "to be an inhibitor to want to use the home delivery as a service," he says.

"And we didn't want [the fees] to prohibit the recipient from continuing to use the card," Hafer says.

The fees associated with MoneyWise card differ somewhat from Western Union's general-purpose reloadable prepaid card. For example, MoneyWise cardholders pay nothing to initiate purchases compared with the 99 cents holders of Western Union's general purpose reloadable card pay.

MoneyWise cardholders pay $1 per ATM withdrawal compared with $2 for the company's standard prepaid card.

Western Union has no plans to expand the service to other countries.
In other news, prepaid debit card processor eCommLink Inc. last week announced that Western Union has joined its cash-reload network for prepaid cards. ATM

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