AmEx has come alive in prepaid and expandedwell beyond the boundaries of the gift card segment where itsprepaid success began. By leveraging its brand, AmEx is going wherethe others have feared to tread; up market.
It began the voyage beyond gift with the PASS teen card product,however this solution was tied down because the only funding sourcewas from an AmEx account. We now have word that American Expresshas launched two GPR related initiatives, a pilot with Target andthe AAA Prepaid Membership Card hitting the market this summer.While there are few details available regarding the Target pilot,given the demographic of Target customers, this prepaid product iscertainly shooting for adoption well outside the traditionalunbanked & underserved market,
Mercator Advisory Group, while recognizing the valuablecontribution prepaid cards can make towards the goal of financialinclusion, has long stated that there are even greater volumeopportunities for prepaid up market – and at the moment AmericanExpress has that market to itself. Discover, should it wake up tothe opportunity, has a similar position in the mid-market, and thisis still targeting an audience well above the current unbanked andunderserved target market.
The American Express brand is typically associated with service,safety, rewards, and travel – all attributes that align extremelywell with the AAA member. While it has yet to be seen how many AAAmembers will activate the AmEx prepaid card, it appears themarketing incentives have been put in place with a $25 gift cardfor an initial load of $200 or more and a cash back offer.
Of course, pretty much any program manager could establish asimilar relationship with a significant brand. For example,Netspend has announced that it will partner with BET on a prepaidproduct. The difference here, beside the obvious demographic one,is that this BET/Netspend relationship is relatively one sidedsince BET provides the more recognizable brand and the marketaccess / channel. BET is, in essence, looking for a product partnerand not a partner that adds gravitas relative to the financialsolution. While American Express may not necessarily have alignedwell with the BET demographic, American Express brings significantvalue into the equation for both Target and AAA because its brandis a trusted financial services and payment card supplier.
So American Express will now look for partners with a largecustomer base that aligns with the American Express brand. I expectthe prepaid industry will see several new innovations come out ofAmerican Express as it makes its way into the GPR market, sincethey can use their brand to create different value propositionsthan the existing prepaid participants. In particular, it will beinteresting to see what other assets American Express brings to thetable with its prepaid offerings. It has a significant corporatepresence (corporate cards), a leading rewards program, Travel (AmexTravel Related Services), Small Business relationships (OPEN), anda wealth of merchant relationships (co-branded cards). AmericanExpress is officially the first major financial institution to bepositioned as a GPR game changer. I wonder who’s next?