Visa Looks to Imaging ATMs to Offer Prepaid Card Reloads

Prepaid cards usually get reloaded through direct deposit or when the cardholder takes cash to a merchant, who then swipes the card and receives confirmation that the value has been credited to the card. Now Visa Inc., in an effort to expand its Visa ReadyLink prepaid card reload network, is pushing the reload frontier out to ATMs that accept deposits without envelopes. Visa last week announced that it had configured its VisaNet transaction network to facilitate envelope-free ATM reloads. On the other end, Visa is talking with several major financial institutions and ATM owners about offering the reload service on no-envelope ATMs, which are just establishing a foothold in the market. “We're hopeful we'll have some announcements to make throughout the rest of this year and into 2009,” Hyung Choi, senior business leader, tells Digital Transactions News. He declines to identify the banks with which Visa is talking. Choi claims Visa will be the first to support such transactions through a branded network. Kate Monahan, an analyst with Boston-based Aite Group LLC, says she's not aware of similar services in the prepaid market, and she says it could help financial institutions attract consumers without bank accounts?the core customer group for network-branded prepaid cards. “Banks that are interested in capturing more of the underbanked or unbanked might be especially interested in this,” she says. ReadyLink has 7,000 merchant locations and linkages with other prepaid card networks such as Safeway Inc.'s Blackhawk Network and Tio Networks Corp. Envelope-free ATMs, while still only a small percentage of the approximately 400,000 U.S. ATMs, have the advantage of giving the depositor an image of the currency or checks inserted into the machine. In a prepaid card context, that gives the cardholder instant verification that the value's been loaded, and he or she wouldn't need to wait in line at a store. “It made natural sense for us as we looked at our underserved cardholders … to use that channel to add value to their cards,” says Choi. “It provides another level of convenience.” Transactions would work similar to a conventional ATM deposit. The cardholder would insert her eligible prepaid Visa card, and then the currency or cash to be loaded. After following a few prompts, she would receive a receipt stating the updated value on the card. According to Choi, the operational hurdles in getting VisaNet to handle the ATM reloads were not high. “We simply had to make a few minor modifications to support transactions through the ATM channel,” he says. As in a conventional ATM transaction, the card issuer would pay interchange to the ATM acquirer and Visa would get its standard network fee. The ATM owner would set pricing for the consumer, according to Choi. While reports in local media have said some consumers have had problems making deposits at the new imaging ATMs, Choi expects few glitches. “I don't see any concern there,” he says. “As far as we've seen and we've heard, well over 95% of consumers are satisfied.”