One of the most exciting innovations that came out of Apple’s WWDC 2017, was the “Venmo competitor” Apple Pay Message that is built on a digital debit card called Apple Pay Cash. APC is powered by prepaid leader Green Dot and is the latest deployment of a virtual prepaid account. In 2016 Square launched a virtual prepaid debit account linked to the Square Cash app as a key element of it’s evolving payment strategy.
And the trend toward virtual is not just for prepaid. China Union Pay has announced the UnionPay Cloud Quick Pass QR payment system which allows a customer to make a payment by presenting a QR code rather than a plastic card. And traditional FIs like Wells Fargo, Chase and Bank of America are rolling our cardless ATMs to allow accountholders to get cash without their debit card.
What is the common tread across all these developments? Mobile Apps. With the US smartphone penetration exceeding 80 percent, mobile solutions are the future and businesses everywhere are embracing ways to take cardless payments.
So the cards in your wallet are about to go the way of the dodo, right? Not anytime soon.
NFC, QR codes and temporary PINs have been around for a while and are only operational in a few million of the 100’s of millions locations that accept EMV and Mag Stripe plastic cards worldwide. But a virtual prepaid account makes a lot of sense for some important verticals.
Incentives, Rebates & Rewards
Businesses send out millions of one-time payments every year and prepaid cards have become the predominate solution. When Maytag sends out a $500 rebate prepaid card they enjoy both marketing exposure and cost savings versus sending a check. Those benefits far outweigh the cost of the plastic card. But if a retailer wants to send a $10 thank you to customers or a health care provider needs to refund a $30 co-pay, then a virtual prepaid account is much more cost effective than a physical card. The recipient can use it to shop online, get cash at a cardless enabled ATM or even get cash back at select retailers.
Travel & Entertainment
If an employee travels a lot then it makes sense to provide them a prepaid or credit card to cover expenses. However, many employees only travel a few times a year and they don’t want to use their personal cards. A virtual prepaid account can be used to pay for hotels, seminars, etc. And when linked to a mobile account they can be used at locations that accept NFC, QR codes and temporary PINs. So why incur the cost of issuing a physical card when a virtual account can meet the need?