This post by Todd Nuttall, CEO of Better ATM Services, first appeared on www.atmmarketplace.com.
Market forces often collide, some resulting in tremors that portend things to come. The recent passage by the Connecticut General Assembly of legislation in favor of adopting new requirements for many prepaid products could be a harbinger of things to come.
Quietly set to take effect Oct. 1, the legislation opens the door to interesting new requirements for prepaids, including one that details refunds or transfers of unexpended prepaid balances and interest on those unexpended balances via linkages between prepaid cards and FDIC-insured bank accounts.
There has been seemingly little interest paid to the legislative goings on in Connecticut. Have you been watching?
None of us can really say it’s a surprise. Who hasn’t been waiting for the other shoe to drop? Prepaids developed largely outside of the bounds of traditional banking.
And rightly so. There has been a massive need and prepaids have answered that need for some 100 million U.S. citizens who have adopted prepaids as an important way to hold and use their money.
Now that prepaids have emerged as a banking model of their very own, they increasingly collide with the mass of regulatory and legislative requirements that have proliferated around banking virtually from time immemorial.
Is state-by-state legislation ultimately going to overthrow the very foundation that defines prepaids’ raison d’être? What must we learn, and learn quickly?
In Connecticut, the 147–0 vote tells me that the legislators think they are making a positive mark for consumers. We might all wonder whether they or their legislative scribes understand the implications.
What I can say with certainty is that viewing prepaids as a quick and dirty solution to payments belies the reality and misses the bigger picture. They must increasingly provide access to security, flexibility, controls, simplicity, and convenience.
You might think it impossible. Those are contradictory forces, you say. To that, I offer the over-arching answer — innovation.
Better ATM Services has focused on combining the best of both worlds. How do you combine the security, convenience, authentication and compliance required of financial accounts to the venerable “prepaid” card?
We do it by combining the robust network and features of ATMs with the best of the capability of cards. It’s clear that a vibrant future lies in leveraging the world’s more than 2.3 million ATMs, which remain the most secure, convenient, consumer-trusted distribution service.
Just think of the myriad services you can offer by combining features of traditional banking with those of prepaid products. On a number of occasions, I’ve gathered a group of people in a room to explore “what if” scenarios, and the result is a long list of features that would become cravings for the prepaid masses.
While consumers continue their love affair with prepaid cards, the industry faces a number of interesting challenges. We’re just getting a look at the opening chapters of a story that is being written and rewritten on a number of fronts.
Both the prepaid and ATM industries stand at what might well be an historical crossroads. It is my hope that together we will not wait to see where the tremors lead, but rather will take the lead by capitalizing on the innovations that hold a world of possibility and profitability.