University National Bank experimented with the prepaid card program but during the grant period did not generate significant volume. They also changed course during the 3-year period by offering two separate card programs.
Now that the bank’s management has become convinced that prepaid cards could become a profitable business; it not only intends to continue offering them but also plans to make it a significant scalable business.
University’s first prepaid card program, launched in 2006, was non-reloadable prepaid card designed to give low-income consumers an alternative to check cashers and other non-bank financial services providers.
That program was shut down the same year.
University began testing its second card program, the University Mobile Bank Prepaid Card, in 2007 and launched it in 2008. It was designed to reach consumers with no bank accounts.
The bank contracted with three independent sales organizations (ISOs) to sell
the card in other states. At the end of 2008, it had a total of 1,247 cards outstanding. The cards from 2006 had already been cancelled. The Mobile Bank Prepaid Card program ended in 2009 after University Bank decided to hire a new processor.
2006 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08
274 0 0 10 20 34 47 295 1247
No accounts were opened for pilot prepaid cardholders, and its mobile banking cards were cards used in other states, so those cardholders did not become accountholders.
The cards did not make a profit for University Bank. University Bank considers the grants as investment dollars as it built up its program.
The bank said it has changed its approach from trying to sell cards to people without bank accounts directly to serving as the issuing bank for processors and ISOs that serve a variety of consumers – including consumers without bank accounts or who use non-bank financial service providers – who want prepaid cards.