The conventional wisdom has always been: prepaid card customers will pay a fee for mobile check deposit, but bank customers won't. A year ago, Regions Bank decided to charge a fee to both audiences and has monitored the results.
Surprisingly, many mass-market bank customers are willing to pay top dollar for the service. Prepaid and bank account users pay the same fee of up to 3% of the deposit value for immediate access to funds (with a $5 minimum), and bank customers have the additional options of paying 50 cents to get funds in two business days or $3 for same-day (but not real-time) deposits.
"When we launched, we knew that we were going to be one of the few banks that did not have a free option, and within the first few days we saw an uptick of negative customer feedback on social media [and app store reviews] but that died out very quickly," says Stephen Lamar, senior vice president for e-business product and channel management at Regions Bank. "Since then, we've seen consistent utilization and positive feedback from customers who actually use the products."
Regions launched the mobile deposit service simultaneously for its prepaid and mass-market bank customers, but the feature was originally designed for users of the Regions Now prepaid card, Lamar says.
There are many audiences for prepaid cards, including the underbanked, who also frequent check-cashing stores. These stores offer immediate access to funds, so prepaid card issuers typically try to match that level of service, even if it means imposing a fee or extra steps for authentication.
Mass-market bank customers have different motivations for wanting immediate access to funds. Many of Regions' customers are small-business owners who receive checks for the services they offer. When these business owners choose to pay a 3% fee to cash a check right away, "they get the guarantee that the checks that they are receiving are actually good," Lamar says.
The bank is developing a dedicated small-business platform for these customers, he says.
There is a lot of overlap in the audiences for prepaid cards and traditional bank accounts, says Cecilia Frew, Visa's senior vice president of prepaid products. "One of the trends in prepaid is this notion that the mass bank consumer will use it as a companion card," either to keep their spending under control or to set aside their "fun money," she says.
Small businesses and other customers value the option to get funds right away "instead of wait for it to clearand maybe not clear," Frew says.
Prepaid card users have demonstrated that they are agreeable to fees for check-cashing and other services if those fees are consistent and clearly disclosed. And prepaid fees and features have become much more reasonable in the past five years, Frew says.
Regions' tiered pricing model is based on Amazon.com's shipping policies, Lamar says.
"Customers are willing to wait for a while for super-saver shipping, or pay a little extra to have it the next day," Lamar says. "We are very pleased and surprised at the number of customers who are choosing what we refer to as our accelerated options," he adds, though he would not provide specific usage numbers.
The bank is studying its prepaid card users' habits as it develops more services for its mass-market bank customers, Lamar says.
Another example is the bank's integration of Western Union services online. Through Western Union, Regions offers same-day bill payments to online banking users. The bank now is focusing on "speed and immediacy for most of our payment products," he says.
The bank issued a survey four months after the mobile deposit feature launched, and over two thirds of respondents gave the service a "five out of five" rating, meaning they consider it very valuable, Lamar says. "It was very encouraging news for us given that it was a brand new product and a brand new concept, too."
The bank is preparing to survey its customers again to obtain feedback on the mobile check deposit service after a year of use, he says.