On May 5, NetSpend Corp. announced that ithas signed a deal with Black Entertainment Television, LLC (BET) tomarket prepaid cards to the African-American community. In aconference call, NetSpend said that the goal was not to competedirectly with UniRush LLC’s RushCard, and that there were plenty ofunbanked customers to go around, but this doesn’t ring true.
Until recently, the major prepaid card providers seemed to occupyadjacent markets. NetSpend had a focus on distribution throughcheck cashers, while Green Dot focused on retail stores like CVSdrugstores. Mango focused on the Hispanic market and offeredwalk-in storefronts. RushCard focused on the Black community usingonline distribution. While AccountNow focused on the generalunbanked consumer, also using online distribution. Finally nFinanSetried to reach consumers through convenience and discountstores.
Now, it appears as though the prepaid card companies will beasking one another “is this a private donnybrook, or can anyonejoin in?” It is not just the NetSpend announcement that signalsthis. The entrance of players like Western Union, BlackhawkNetworks, InComm, and banks show that more and more providers willbe joining the fray.
In the conference call, Dan Henry, NetSpend’s CEO, said that thereal issue for prepaid cards was not competition with other cards,but the need to build awareness. With companies like UniVisionoffering cards, and banks and others increasing their interestbecause of the changes in debit interchange, it won’t be longbefore awareness is much higher. It is likely more companies willbe positioning themselves to take advantage of clear market nichesby finding partners such as BET. The prepaid competition isstarting to heat up.
