Prepaid cards primarily come in two types:closed-loop cards that can only be used at one issuer’s stores, andopen-loop cards that can be used anywhere the brand on the card isaccepted. There is a third type, and that is the RestrictedAuthorization Network card or RAN card. This type of card can beused at more than one merchant, but it has restrictions on where itcan be used. The restriction may be for a specific group ofmerchants, a particular merchant category code, or for a certaintype of product.
One struggle that RAN card program managers have is educating theircustomers on where the cards can be used. For example, many ofthese cards are limited to a particular geographic area as a way ofencouraging cardholders to patronize local businesses. But notevery business in that area will accept the cards, so how is acardholder to know where to go?
Right now the answer may be that a list is printed on the card oron an accompanying package. But that is an imperfect system becausethe card may need to carry some other promotional message or be toosmall for a list, and separate lists can be lost of left at home.Smartphones could solve this problem and make these cards moreappealing.
Geo-location services can connect customers with businesses, andmany services exist that allow people to receive special deals whenthey are in the vicinity of a particular business. In addition,people will check in to a favorite coffee shop, bar, or restaurantas a way to tell their friends where they are and potentially earndiscounts.
This same technology can be used to instantly alert the holder of aRAN card that they are near or in someplace where they can use thatcard. By registering their card with a mobile application, the usercan tap into a dynamic list of locations and also receive couponsand other offers at the time when they are in the vicinity of abusiness and holding a card with committed funds.
The phone itself could become the payment device as long as all themerchants participating in the RAN have the same point of saleacceptance capabilities. Barcodes, near field communication, orsome other acceptance method could be used to access funds storedon the card.
The power of RAN cards to tap into specific psychographics – peoplewho have the same hobbies, travel to the same locations, or arepart of the same rewards program, for example – has yet to be fullytapped. It may be that smartphones are the tool that will finallyunlock the potential of this payment technology.