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Prepaid Matures as an Industry…What’s in it for You?
Wendy Harp-Lewis, InteliSpend Kathy Yee, Wells Fargo
Juli Spottiswood, Parago Kirsten Trusko, NBPCA (moderator)
Tuesday October 22, 2013
Session Description Do you wonder what you're missing, asking yourself, “what’s in it for me?” when it comes to prepaid? Prepaid has become increasingly mainstream, and is broadening into specific markets with enhanced product offerings. This creates the possibility of longer-term, more profitable customers, and cements the value of prepaid for both traditional financial services firms as well as early stage innovators. Hear from this panel on the evolving value of prepaid as the market matures, and how it will continue to provide value as more traditional financial services companies offer prepaid.
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The information contained on these slides is considered the proprietary Information of the Network Branded Prepaid Card Association (NBPCA). It may not be distributed or reproduced without the expressed written permission of an officer of the NBPCA. The opinions expressed by the presenters during this presentation are exclusively their own and subject to change.
Panelists • Kirsten Trusko, Network Branded Prepaid Card
Association • Kathy Yee, Wells Fargo • Juli Spottiswood, Parago • Wendy Harp Lewis, InteliSpend
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OVERVIEW OF PREPAID
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Prepaid card types consumer
fundedcorporate
fundedpublic sector
fundedGift Rebate Emergency assistance
Travel Incentive Disaster relief
Incentives
Remittances Payroll Benefit and welfare
GPR Healthcare and Insurance Pension and SS
Campus Meal vouchers Travel and cash mgmt
Business travel Payroll
Corporate purchasing
single load
reloadable
RELOADABLE CARDS
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Network Branded •Visa •Discover •American Express •MasterCard
Controls • Cardholders Identified • Transaction Monitoring • Deposit, ATM and Spend
Records
Bank Issued •Underlying account •FDIC Insured •CIP Required •AML Program
Features •Reloadable •ATM Withdrawals •Direct Deposit •Bill Pay •Account Management Tools
Reload, Cash
Access
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Prepaid type: Reloadable, with Cash Access Examples include: GPR/Prepaid Debit, Payroll, Government Benefits, etc.
Who uses Prepaid Cards?** •43% are Gen Y’ers. •1/3 earn >$45,000 a year •34% have a college degree or higher.
**Aite Group’s survey of 500 U.S. consumers who use alternative financial services, Q1 2011
“They are choosing prepaid from their other financial product choices”**
Who are Prepaid Consumers? Increasingly mainstream and well educated – choosing prepaid
Recent studies by both Visa and MasterCard have found that >50% of prepaid debit card users also have bank accounts
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New Customers Want
A lower cost DDA alternative
A safer alternative to carrying cash
To spend only money in the account
To make payments with a card
Existing customers want
A secondary account to bucket or control spending (online, travel)
To provide a controlled spending card to a dependent (college student, elderly
parent)
Why do Financial Institutions like Prepaid? • Consumer demand for Prepaid cards
• Financial institutions want to attract and retain customers • Government and businesses want to find efficiencies
THE VALUE CHAIN FOR PREPAID
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CONSUMER
Financial Institution member of a card network
System of record & transaction processing Provides customer care, risk mgmt, process & report disputes.
Under direct supervision / contract of Financial Institution, designs & runs the card program, may provide customer care
Switches transactions, provides risk management and strict operating rules and regulations
Endpoint locations where prepaid cards are sold to consumers; Online, Retailers or Malls, Financial Institution Branches
Provides transaction processing and customer support for merchants
A merchant accepting value loads OR an MSB operating a network to provide reload services to cardholders through reload sites
Network Branded Prepaid Value Chain Includes those outside of traditional credit/debit partner network
Load Reload, S Sites &
Networks
Seller/ Distributor
Acquiring Processor Network Program
Manager Issuer
P Processor Issuer
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Role of Program Manager
14 * The role of program manager can be filled by a traditional program manager, an issuing bank, card processor or money transmitter
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WHY PREPAID IS THE MOST EFFECTIVE PROMOTIONAL TOOL
Why corporations like prepaid
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A better way to rebate
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A great way to thank your customers
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A great call to action
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Make a Big Splash with Moen Showrooms of Distinction Sales Consultants
LEGAL/REGULATORY ENVIRONMENT
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Federal Regulatory Environment The Agencies
• OCC (including some, but not all, former OTS guidance and interpretations).
• FDIC (supervisory and deposit insurance)
• Federal Reserve (supervisory and Durbin)
• CFPB
• FTC • OFAC • FinCEN (including Prepaid Access
Rule) • IRS (including health care
payments products) • Treasury (Government Payments
Rule)
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Federal
• Gramm-Leach-Bliley – Privacy of customer
information – Data security
• FACTA—red flags • Government Payments Rule • Remittances Rule • Numerous OCC, OTS, FDIC and
FFIEC bulletins and manuals
• FDIC Advertisement of membership Rule
• Brokered deposits rule • Community Reinvestment Act • 23B (and the FRB’s Regulation
W) if affiliates are involved
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Federal
• Bank Secrecy Act – AML (for banks and
MSBs) – CIP/CDD – SARs – MSB (FinCEN Prepaid
Access Rule) – Recordkeeping/informati
on sharing
• Federal Deposit Insurance Act (and GC Opinion No. 8)
• FTC Act • Dodd-Frank\Durbin • CARD Act • OFAC • Electronic Funds Transfer
Act/Regulation E • Unfair/deceptive/abusive
trade practice laws
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State
– Money service business registration and licensing – Gift card laws – Unfair/deceptive trade practice laws – Unclaimed property laws – Wage payment/payroll card laws
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QUESTIONS??
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APPENDIX
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Contact Information
• Kirsten Trusko, [email protected]
• Kathy Yee, [email protected]
• Juli Spottiswood, [email protected]
• Wendy Harp-Lewis, [email protected]
www.nbpca.org or e-mail [email protected]
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Guidance
• OCC 2011-27. OCC Guidance on Prepaid Access Programs
• OCC Bulletin 2008-12: Payment Processors, Risk Management Guidance
• OCC Bulletin 2004-20: Risk Management of New, Expanded, or Modified Bank Products and Services
• OCC Bulletin 2001–47: Third-Party Relationships, Risk Management Principles
• OTS Thrift Bulletin 82a, Third Party Arrangements, September 1, 2004
• FDIC FIL 44-2008: Guidance on Managing Third-Party Risk
• FDIC Compliance Manual on Third Party Risk, Section VII-5.1 (amended, June. 2011)
• FFIEC “Retail Payment Systems” Booklet, Information Technology Examination Handbook
• FFIEC “Authentication in an Internet Banking Environment”, October 2005, supplemented on June 28, 2011
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Kirsten Trusko Kirsten Trusko is President of the Network Branded Prepaid Card Association. The NBPCA is the cross industry, non-profit trade organization that works on behalf of it’s members representing the entire prepaid value chain - to Educate, Advocate, Protect and Promote the unique benefits of Prepaid products to government, media, industry, and consumers. Prior to NBPCA, Trusko was with KPMG Consulting in payments, banking and insurance. She co-founded two management and technology consulting practices: Prepaid, and Consumer Driven Health Care (Health/Banking/Insurance), helping over 30 major financial institutions enter and success in these markets. Prior to this she lead start up, built out, and turn around of financial services divisions in consumer and commercial products, secured and unsecured lending, mortgage, payments and cards. She has focused on emerging products and markets, for speed, customer value, sustainability and profitability. She serves on several industry advisory boards, as well as various charity organizations. She completed Yale School of Management, Executive Management Program, has an MBA, and graduated from University of Washington in Business.
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Katherine Yee Senior Vice President - Wells Fargo Deposit Products Group with over 25 years of banking experience in the areas of financial reporting, retail bank finance, electronic banking, and debit and prepaid card product management & new product development at Crocker National Bank, Bank of America and Wells Fargo. Kathy currently manages the prepaid business for Wells Fargo Bank. Products include gift, general purpose reloadable, payroll and government. Prior to running the prepaid business, managed the marketing and product development for the debit card consumer and business portfolios. Kathy has a B.S. from the University of Santa Clara and an M.B.A. from the University of San Francisco
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Juli Spottiswood Juli Spottiswood is the President & CEO and Board Member of Parago, the leading provider of innovative reward programs that drive behavior and promote brand loyalty with consumers. She drives the strategic expansion of the company’s offerings and innovation within the rebate processing and integrated promotions industry. Juli is an ardent advocate for clients and customers, helping blue chip clients run some of the most successful and heralded rebate and consumer incentive programs. Juli helped form Parago in 1999 as the company’s CFO and was promoted to President and CEO in 2007. Since then she has spearheaded dramatic improvements for the consumer rebating experience: introducing a variety of payment methods like prepaid cards and PayPal, a choice of submission methods including online or point-of-sale from some merchants, customer service interaction via web chat and dramatically reduced turn times. In-turn, Parago’s clients are finding a deeper value in rebates than ever before. Juli has worked diligently to build and grow a strong company and positive working environment, as evidenced by Parago being named to both the Dallas Business Journal’s Best Places to Work and the Dallas Morning News’ Top Workplaces lists. Juli also serves as a Board Member and Treasurer of the Network Branded Prepaid Card Association (NBPCA), a nonprofit association formed to promote the use of prepaid rebate cards as an alternative payment vehicle. In 2009, Juli was the recipient of the Ernst & Young Entrepreneur of the Year in the Southwest region. 33
Wendy Harp Lewis Wendy Harp-Lewis is the Chief Compliance Officer, Vice President Corporate Legal for InteliSpend Prepaid Solutions out of St. Louis, Missouri. InteliSpend is a leading provider of prepaid solutions in the business-to-business space. Wendy is also the Prepaid Compliance Officer for the subsidiaries of InteliSpend’s parent company involved in prepaid. Wendy is responsible for mitigating company risk while balancing the needs of cardholder, client, merchant, sales, and marketing with compliance needs. Wendy leads a team responsible for all legal, compliance and risk functions including fulfilling widening regulatory requirements. Wendy has been a member of the NBCPA since its inception. She is a Certified Anti-Money Laundering Specialist and the Co-Secretary of the Greater St. Louis Chapter. Wendy and/or a member of her team are members of the GRWG, PAFF and Payroll subcommittees. Wendy brings a perspective from the legal and business side with the experience of a leading business-to-business Program Manager and multi-network issuer. In her spare time, she is a contributor to the legislative section of the Prepaid Evolution blog (http://prepaidevolution.com/category/incentives-legislation/). Prior to this role, Wendy served as director of human resources, director of legal management, and director of legal, compliance, and risk management. She graduated summa cum laude with a B.S. in business management from Maryville University.
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NBPCA: What We Do • Educate: Consumers, Corporations, Government, 3rd Parties, and Media
• Advocate: Industry bar through the Code of Conduct and Leading Practices
• Protect: Consumer choice, fully featured competitive product set
• Promote: Unique benefits to all audiences and customers: Consumers, Businesses, Government, Media, and 3rd Parties
NBPCA: Who We Are The non-profit, inter-industry trade association focused solely on prepaid cards issued by financial institutions - carrying the American Express, Discover, MasterCard or Visa logo. NBPCA’s membership uniquely has representation from the entire Prepaid value chain and currently includes over 800 people from 90 companies.
Network Branded Prepaid Card Association Educate. Advocate. Protect. Promote.
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