The new report titled A Rose by Any Other Name: What’s the Difference Between Debit and Prepaid? presents an analysis of the factors that financial services providers need to consider when deciding on an account structure for new products. Recent industry developments have made debit and prepaid accounts seem a lot like each other. While there are some commonalities, significant differences remain that can lead to one account structure being superior to another depending on the goals of the product being designed.
The author's research report identifies key factors that need to be considered when designing a new product. The customer needs, economics, infrastructure, and regulations will all influence which type of account structure makes sense for a new product.
"Prepaid and debit accounts both offer advantages and disadvantages for financial services providers, so understanding the key decision points can lead product designers to the most profitable configuration, " Ben Jackson, director of Prepaid Advisory Service, and co-author of the report, comments.
Highlights of the report include:
- The important differences remaining between debit and prepaid account types that can make or break a product
- Details of the key factors to be considered by financial services providers in choosing which account type of deposit/transaction account launch: the audience, economics, infrastructure, and regulations that apply to each account type
- Marketing necessary to show the value of prepaid cards and debit accounts to their likely audiences.
- The importance of developing a comprehensive balance sheet of the revenues and expenses of debit versus prepaid account types to make the right decision on which to launch.
- The necessity of comparing the differing tools required to offer a prepaid card or a debit account with the providers’ existing infrastructure
- The regulations that will heavily influence heavily the success of each product
1. Executive Summary
2. Introduction: Are Prepaid Cards Just Debit Accounts by Another Name?
3. Audience/Marketing: Who Will Use This Product?
4. Economics: Will This Product Be Profitable?
5. Infrastructure: What Resources Are Available Today?
6. Regulations: What Is Allowed?
7. Conclusions: Choosing an Account Type Requires Good Planning
List of Tables & Figures
Figure 1: Criteria for Deciding on Account Structure
Figure 2: Audience/Marketing Considerations for Choosing an Account Structure
Figure 3: Economic Considerations for Choosing an Account Structure
Figure 4: Infrastructure Considerations for Choosing an Account Structure
Figure 5: Regulatory Events Influencing Decisions About Prepaid and Checking Account Structure
Figure 6: Regulatory Considerations for Choosing an Account Structure
Table 1: Features on Debit and Prepaid Cards Are Comparable
Table 2: Requirements for Open-Loop Prepaid to Avoid Interchange Caps If There Are No Other Exemptions
Table 3: Key Decision Points in the Prepaid Versus Checkless Checking Conundrum