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Walmart announced that customers have moved more than $2 billion through Prize Savings, its “virtual vault” prepaid savings program, which it developed in partnership with major prepaid card issuer Green Dot and Commonwealth in 2016.
The early success of this program demonstrates a creative approach to a prepaid offering that providers should pay attention to.
Here’s what it means: Walmart’s Prize Savings program is offering customers a more robust prepaid service that mirrors traditional banking.
Consumers are increasingly turning to alternative financial offerings, driving more users to substitute bank accounts with prepaid offerings.Twenty-five percent of the US population is un- or underbanked and has historically been a top target for prepaid providers.
But other segments of the population, like millennials, are becoming more attuned to alternative financial services and are turning to prepaid as substitute for traditional bank accounts, widening prepaid providers’ addressable base.
And providers have started taking note: Green Dot, for example, launched a campaign called “A New Kind of Bank,” which targets younger consumers by shifting the notion of prepaid products from card-focused platforms for the underbanked to legitimate, comprehensive financial services.
Because prepaid cards already feel like debit cards, embedding them with more mainstream financial services like savings features could motivate consumers to choose a more robust prepaid product over another option.
The bigger picture: Prepaid providers could mirror Green Dot’s approach to meet consumer needs, while tapping into a large, engaged audience.
- Tying in an incentive to a prepaid card could keep consumers engaged and loyal.The Prize Savings program allows customers with the Walmart MoneyCard to put up to $500 in a virtual “Vault” for savings. Each dollar earns an entry to win a cash prize every month ranging from $25 to $1,000. Prize Savings customers’ savings increase by 35% on average and Walmart reported a 274% usage increase since launching the program. Offering a savings feature can attract users looking to use prepaid products for their primary financial needs; tying in a prize component could encourage loyalty and allow the product to stand out from competitors.
- Partnering with a major retailer can ensure prepaid providers reach a wide audience. Prepaid issuers generally don’t have extensive footprints, so partnering with retail outlets that have a wide physical reach and huge customer network is important as it ensures that cards are widely available and that users who aren’t as digitally savvy can easily reload their offerings. Green Dot and Walmart’s partnership does this well, as it offers a branded prepaid card and an extensive reload network, which gives Green Dot’s offering reach without the company having to run brick-and-mortar operations. Providers that take a similar approach to Green Dot and Walmart could boost their competitive positioning and capitalize on growing prepaid volume: Business Insider Intelligence expects prepaid card transaction volume to reach $396 billion by 2022, up from $290 billion in 2016.
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