A new agreement between Green Dot, MasterCard, and Wal-Mart means that more people will soon be able to add cash to their prepaid cards when they check out at a register. Rapid Reload, where a person adds cash without buying
a load, will be available for cardholders of a prepaid card running on the MasterCard rePower network. Give cash to the cashier, swipe your card, and within minutes your account will be credited.
Nonetheless, Rapid Reload will not be free except for people with Wal-Mart Preferred MoneyCards. While that added functionality is a boost, it won't mean that they can beat the competition on price. BlueBird cardholders can use cash to reload at a Wal-Mart register for free. Ditto for the Serve cardholders at some 7-Eleven and CVS stores.
Nonetheless, it is another money saver for the portion of the 99 percent that rely on a prepaid card for their payments. This means that loading cash will be about two dollars cheaper for people that were previously buying MoneyPaks to load rePower-networked cards at a Wal-Mart.
Does one cannibalize the other? Probably not significantly, as the availability of the two options exists in only a fraction of their total retail locations.
"Both Walmart Rapid Reload and MoneyPak reloads are powered by the Green Dot Network," said Green Dot's CRO Kostas Sgoutas, "so it’s less about how the use of one may impact the demand for the other and more about giving our mutual prepaid debit card customers more choice. Some customers prefer the utility and widespread retail availability of MoneyPak reloads, while others prefer the single-step convenience and/or cost-savings of using Rapid Reload at their local Walmart store."
The Creation of the Disclosure Regime for Prepaid Cards should Learn Something from Rapid Reload
Rapid Reload are at once a significant cost savings for consumers but also one more example of why any prepaid card disclosure regime has to account for the pace of innovation in this product space. If a card can give cash users the means to add value to their account without paying for a load, then many people will see their use cost drop.
The arrival of a Rapid Reload should also instruct the conversation that is currently taking place at the CFPB on prepaid card disclosures. The ultimate choice has got to find a way to keep pace with change. All too often, regulatory frameworks are driven entirely by a rear view mirror. Most rule-makings make a best effort to express the status quo. But think about what happened during the go-go years of the subprime mortgage lending period. So many of the features that led to unsound lending were taking place out of regulatory reach. The system paid too much attention to who made loans when it should have been focused on what kinds of loans were being mades. Banks had to meet a higher standard than was the case for mortgage companies.
Rapid reload was not contemplated when CFSI engaged stakeholders on Compass Principles for prepaid. Were the list of fees proposed by the box that came out of that discussion to be put into a final rule, then a major cost differentiator would be left out. The system has to find some way to remain current. It is my belief that the data-collecting capacity of the CFPB should be tapped. Payment processor data will identify how cards are being used as well as when costs are being incurred. If the CFPB wants to help people understand how much they are likely to pay for their payments account, the tools are already within their reach. If the CFPB decided to make a habit of drawing on those records on an annual or semi-annual basis, then new cost-savers like Rapid Reload could be utilized to communicate costs to consumers.
One more thing worth mentioning is the ongoing opacity in fee schedules. Here is how the pricing on a Wal-Mart Rapid Reload was explained to me: "All Walmart (sic) Rapid Reload transactions cost up to $3.74 (except Walmart MoneyCard Preferred card reloads, which are free, and MoneyCard Basic and Plus, which cost $3.) In all, there are five different load prices for the nine different versions of Green Bot cards. How then, should a standard fee box explain that kind of structure while still fitting fourteen other functionalities and fees into a small space on the back of a j-hook?