As a company, Wave Crest embodies the future of prepaid. The company sells payment platforms that support a wide range of prepaid card programs, but it also offers a mobile wallet platform that could place prepaid at the heart of digital payments. Wave Crest’s mobile wallet platform is flexible enough to allow retailers and wireless providers to craft their own business models and services around an open digital payments platform. Users can opt for mobilized prepaid programs, money transfer, bill payment or a more simplified mobile wallet.
It’s no surprise that group president Miles Paschini is the driving force behind the company. Paschini has a long track record in the prepaid world, and therefore, the vision to see the clear intersection of prepaid and alternative financial services. Paschini shared with us Wave Crest’s prepaid and mobile payments evolution.
How did you get into the prepaid space?
MP: I founded a company in 1999 … we were in prepaid but we had a different version. We developed mobile PIN top up. We were primarily focused on the telecom industry and how they would replenish airtime.
That company was sold to Blackhawk [Network] in 2006. Blackhawk was looking to expand into the small to medium retail space. The move to Blackhawk really opened my eyes to the card side of prepaid.
I had viewed the business as a replenishment business and then I realized there were a wide variety of financial service products, and that we had the ability to put a financial product in someone’s hand that was not through a bank. So when I left Blackhawk [to start Wave Crest], the vision was to develop a processing company for financial services that had prepaid at the core.
Why is it important for prepaid to be at the center of these alternative financial services?
MP: Well there are a couple of interesting markets for [alternative] financial services. There are people who are underserved from banking. And there are also people who don’t want to work with banks – or they don’t want to go to the bank branch anymore. When was the last time you went to a bank?
If you look at prepaid, it’s a way to deposit into an account that you have access to. I don’t look at it as prepaid — I look at it as a way to deposit funds. If your employer gives you a [feature-rich] payroll card, it’s going to operate no differently than a bank account.
Which vertical markets are most attractive for prepaid-based financial services? Also, is there necessarily an overlap in the prepaid and alternative financial services consumer base?
MP: We don’t look at prepaid from the consumer approach. We look at industries where there are large sums of money being paid from one [party] to another. Within that, we try to identify improvement. For example, we are in the tax refund disbursement business. There is an interesting payroll model there. Tax payers are looking to receive funds. Those are people who don’t prefer to use bank accounts. There happens to be a massive overlap between people who utilize a prepaid card to receive tax refunds and people who are underbanked, or who don’t want to use traditional banks.
[As another example], in the transportation business, payments to taxi cabs are inefficient. We help taxi fleets pay their drivers with a feature-rich product.
We are bullish on the gaming industry in general. We operate lotteries in Georgia and Michigan where they are paying out small value payments, and we are now paying those on cards. Those cards are open loop. Interestingly the demographic of people who play the lottery overall is similar to the group of people who don’t want a bank account.
We like the relationship with online gaming. In a non-face-to-face relationship, you need a real time way to pay people. Our very first customer was an online gaming customer that was paying customers in 30 countries, so we developed a card for them that would allow them to pay people without [a huge] cost, and in real time.
But there is a strong parallel in what we do across all industries. For the [party] that has to pay, we make it more cost effective, and we are also doing feature-rich products for the beneficiary.
[There is also opportunity] in the campus business, paying students out their loans and grants. We think of the model as B-to-B-to-C – or business, to business, to consumer. If you think of campus payments, student lenders make payments to bursars’ offices, and they have to make leftover payment to students. We sit in between the university and the student.
Wave Crest enables many business models, but there is one platform at the heart of them. One of the groups you’re marketing that platform to is wireless providers. How do you foresee carriers and/or MVNOs putting the platform to use?
MP: We’ve developed mobile wallet applications for Telefonica and Reliance [Communications] in India. Those were very interesting products, but ahead of their time. With Apple Pay you’ll have enough adoption of NFC, and now MVNOS will have their chance to shine.
The role MVNOs play is that they have a direct and daily relationship with prepaid users. These are people who are either from a younger demographic or they are underbanked people who don’t want to deal with a bank branch.
We think they’re perfectly suited to provide mobile financial services to their customers. They have the right audience, with the right device with their customer base.
Also, one of the things that disadvantaged MVNOs in the past was that it was costly to get into the business. MVNOs are not telecoms. Our early customers [larger providers] spent a lot to get into this.
This is different now. We can provide them with a full product where we do the financial services and they do the marketing. We have an off-the-shelf offering for them. They can pick their model of services, put their brand on it and go to market very quickly. [With that], they have a self-service website with IVRs and all back office stuff.
What kinds of services will MVNOs look to offer in mobile payments? Are they looking at replacing traditional payments, adding bill pay?
MP: The initial goal of the MVNO was to provide features, such as check cashing, direct deposit and bill payment. Those things create a better current account for their customers. But Apple Pay is going to clear the way for there to be payment acceptance – to use devices as payment. Previously NFC failed because there wasn’t enough ubiquity of devices. So they had to lead with full service current accounts, but now that they can get merchant acceptance that will [broaden].
On your website under “Use Cases” for your payments platform, there is a category that says “Imagine” in which you encourage users to dream up their own payments model based on the platform. Why is it important to leave space for innovation and imagination in this era of payments and prepaid? Have you seen interesting use cases emerge?
MP: The payments industry is evolving rapidly and despite the fact that Wave Crest offers several innovative and award winning solutions, we respect the fact that entrepreneurs and corporations will have unique ideas and needs. Our service oriented platform allows us to mix and match and even invent new services. As far as new and interesting requests, I think the most exciting products we are developing are ones where we are bridging existing systems or forms of payment with new and emerging ones, in particular where digital currencies and loyalty interact with traditional payments products. •
Miles Paschini is the Group President for Wave Crest. For more information, visit www.wavecrest.gi.