It is no secret that I believe the term”general purpose reloadable” is a huge liability to the prepaidindustry. This entry presents my argument. Here is my rationale foreliminating the term GPR and creating new segments and terms that Itrust will better serve our industry:
1. GPR fails to identify segments that have significant operationaldifferences. Mercator has been tracking 16 individual segments thatutilize GPR for the last four years, including unemploymentbenefits, social security payments, travel, remittance, payroll& T&E. In these four years, this taxonomy has becomeinsufficient, as the segment Prepaid Financial Services has evolvedinto a range of highly differentiated segments including teen, turndown, bill pay, tax returns, and budgeting. While Mercator wouldlike to measure these segments individually, that’s impossible toexecute when the industry fails to identify and measure theindividual use cases.
2. The continued use of the term GPR leads organizations that areunknowledgeable regarding prepaid implementation details to assumethat these reloadable segments are operationally very similar, ifnot the same. Chief among these are regulators and consumer groups,which already assume that GPR is a product that is solely servingthe LMI communities. Due to this incorrect assumption, theseorganizations use the term GPR when they lobby for fee restrictionsand other new rules designed to protect the LMI consumer. Whenthese rules are applied too broadly, they will damage many of thealternate use cases. For example, if ATM usage is mandated and feeson ATMs eliminated for GPR, it will severely impact the ability todeliver a budget product, since ATM use does not help the consumerbudget. Free ATM access would also damage Travel cards, since thefees incurred with international ATMs are even higher than domesticATMs.
3. Clinging to the term GPR promotes sloppy, undifferentiatedmetrics. Instead of tracking performance by specific use cases,such as teen, turn down, PFS, budget, etc., all are lumped into asingle set of GPR metrics. As a consequence, the accuracy ofbusiness plans are significantly diminished since usage variancesacross these use cases continues to go undiscovered. For example,it is likely that a budgeting use case drives more frequent loadsover a longer period of time while generating fewer cost generatingtransactions. But if the budgeting use case is not trackedindependently these details remain undiscovered.
4. GPR eliminates the ability to identify new use cases or fullyunderstanding current use cases. If, as described above, individualconsumer uses cases are not tracked, then new uses discovered byconsumers for the cards go undiscovered, which makes it impossibleto maximize a product’s profitability through marketing andeducation efforts.
5. All of the above slows development of new markets. Instead ofevaluating consumer usage by specific use cases and thenestablishing products that better support that use case andcreating marketing programs that draw more consumers to adopt thatuse case, the industry continues to sell a single GPR product. Onlya few program managers have created differentiated products basedon new use cases, such as bill-pay cards.
In talking to a broad range of prepaid industry participants,there appears to be 100% agreement that regulatory issues are thebiggest threat to the prepaid industry.
In my opinion, the factor most likely to cause regulators to takeinappropriate action on this industry is our own refusal toeliminate the term GPR. While 10 years ago the term GPR defined anew innovative product, today the reloadable capability is appliedto many different prepaid use cases. Were it not for the aggressiveregulatory scrutiny now lavished on our industry, we could all talkto each other about GPR. But today select outsiders have more tosay about what will happen to the prepaid industry than we do. Sowhy do we continue to cling to this outdated term? Seriously, ifthere is a good reason for the continued use of the term GPR pleasetell me what it is, because it seems clear to me that the industryis encouraging bad regulations and missing large businessopportunities by continuing to use it.