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PayPerks Drives Use of Government Benefits Prepaid Cards

PayPerks is a start-up company that uses sweepstakes-style incentives to teach people how to use prepaid cards in a way that keeps costs low. In pilots, the company has changed the way cardholders use cards issued in conjunction with government benefits programs, according to a whitepaper released by the Payments Card Center at the Federal Reserve Bank of Philadelphia.

For employees who already had cards, exposure to PayPerks Educational modules increased usage for POS transactions by four times, from 0.8 transactions per week before the pilot to 3.8 after its conclusion. The messages directed to this group instructed them on how to use the card at POS with a PIN or signature authentication. They were advised about the kinds of merchants that are likely to allow cash back with purchases and were instructed in using that method for cash access as an alternative to ATM withdrawals.
Program managers have sought ways to influence cardholder behavior for a long time. While education has always been seen as a key, there has been no magic formula for imparting the lessons of card use. While PayPerks won’t solve every problem with cardholder behavior, the discussion paper from the Federal Reserve shows some of the lessons learned and proves cardholder behavior can be shaped with the right approach to customer communication.

-Overview by Ben Jackson, Senior Analyst, Prepaid Advisory Service.

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