Prepaid Debit Cards

Prepaid Debit Cards – An Unknown Insight

I interned over the summer with a local Austin company called NetSpend, who is in the business of issuing and maintaining prepaid debit cards. I was reluctant to accept the internship at first, which was in the marketing department, because I was unsure of what exactly it was the company did. Eventually, I found out that prepaid debit cards provided the plastic solution for Americans without bank accounts. What a great idea… I wonder why I’ve never heard of it. Surprisingly, at least 12 million households in the country operate their finances without a bank account, and estimates soar as high as 40 million once non-naturalized immigrants and those with no credit are accounted for. The figure represents nearly 13% of the current US population as a potential market.
When I started, I was surprised to find out that the entire marketing department consisted of 8 people. The industry is relatively new (no recognizable market or product older than 15 years) so the channels of operation and methods of distribution are still being worked out. Compared to the credit card and banking industry, it’s still very primitive. However, the marketing department at NetSpend had established customer profiles, program-based market segmentation, and specific channel-based partners to sell the products. Getting back to my anecdote, it was interesting to see how such a large, mass-used product like prepaid debit cards could go under my radar for the past 5 or 6 years, especially as I have become more cognizant of real-world finances. The marketing department primarily works with cash-checking retailers, payday loan services, and currency exchange to push the prepaid debit cards into the market. Those in, and those not in the market for prepaid debit cards primarily differ in their economic statuses. People in the market for this product commonly have low incomes, work hourly-based service jobs, and rely on check-cashers to finance their day-to-day spending.
No wonder I hadn’t ever heard of this before… I’m nowhere close to being in the market for this kind of product. Still, after learning how wide-scale the distribution of this product is, I still think it’s odd that they were unknown to me. It’s intriguing to see that a segmentation that is so simple and so broad like income levels can create such a stark dichotomy between those who are in or out of your market. By operating within the one service that their target market commonly uses, check-cashers, allows them to sell their product to each and every one of their ideal customers, while minimizing marketing and operations cost by limiting their channels of operation.
The insight that I’m getting at is that customer segmentation, even in its most basic form, is a powerful tool for maximizing operation efficiency and minimizing costs. This leads me to wonder how many other products there are out there that serve a mass market that I am completely unaware of.