Fiserv’s Mobile-Capture Check Guarantee Brings a New Twist to Prepaid Cards

Fiserv Inc. executives expect the option to guarantee availability of funds loaded onto prepaid cards from a personal or business check using a smart phone to be a huge point of differentiation for Fiserv’s new Prepaid Source Capture service. Launched last week, the Brookfield, Wis.-based processor’s service enables consumers to launch an app on a smart phone and take a picture of the front and back of a check to be deposited into a reloadable prepaid card account.

Fiserv’s solution, which is built on Mitek Systems Inc.’s mobile deposit platform, is similar to mobile remote deposit solutions offered by such banks as JPMorgan Chase & Co. Fiserv, however, is bringing a new twist to the market for prepaid card users by allowing them to guarantee the funds being loaded onto their card for a fee. When a cardholder makes a deposit using the Fiserv app, he will be prompted whether he wants to guarantee those funds for immediate availability and shown the fee they will be charged for doing so.

“Bundling check guarantee into its solution is a big point of differentiation for Fiserv, because so few solutions providers for mobile deposit do it,” says Bob Meara, a senior analyst for Boston-based research and consulting firm Celent LLC. “Check guarantee not only ensures faster availability of funds for consumers, but eliminates the risk for the prepaid card issuer.”

Fiserv’s check-guarantee service comes from Fort Worth, Texas-based Valid Systems. “One of the key points that came out of discussions with prospective clients for this service was the need for check guarantee,” Gary Brand, director, Source Capture Solutions for Fiserv, tells Digital Transactions News.

Fiserv initially plans to market the technology to prepaid card processors and later make it available to financial institutions. Those segments, however, represent a fraction of the potential market for the technology.

“This is a solution for check-cashing services, which have been moving more and more toward issuing their customers reloadable general-purpose prepaid cards in lieu of giving them cash,” says Meara. “This industry has long sought ways to automate its business and reduce the amount of cash on hand in their retail outlets.”

In general, Fiserv sees its solution, which will be sold as a white-label service that banks and other financial customers can brand, as a way to make loading value onto prepaid cards more convenient. Currently, prepaid card users have to go to a store, kiosk or ATM operated by their prepaid card provider and insert cash to load additional value onto their card, or do so through a bank branch.

According to data from Maynard, Mass.-based Mercator Advisory Group Inc.’s June 2012 CustomerMonitor Survey, 13% of smart-phone owners purchased a general-purpose reloadable prepaid card within the previous 12 months.

Additionally, a March 2012 Federal Reserve report entitled Consumers and Mobile Financial Services revealed that 64% of unbanked consumers have access to a mobile phone and 18% have access to a smart phone. Further, 91% of underbanked consumers, i.e. those with one or two bank accounts with no debit card linked to them and typically no credit card, have a mobile phone and 57% have a smart phone, figures that significantly exceed those for the overall population.

“Thanks to retailers like Wal-Mart that are making inexpensive smart phones and low-cost or monthly calling plans available, smart-phone adoption among the unbanked and underbanked, which are big prepaid card users, is growing rapidly,” says Brand.

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