MasterCard Targets Unbanked With Prepaid Retailer Network

MasterCard prepaid cards received new utility this week when MasterCard Worldwide launched a network of retailers, dubbed MasterCard rePower, at whose locations cardholders can use cash to add value to MasterCard- and Maestro-branded prepaid cards. The first rePower reload transaction took place Monday at a Village Pantry convenience store in Indianapolis. MasterCard is using Atlanta-based InComm Inc. to book rePower providers. InComm is a big provider of prepaid technology and services–including cell-phone top-ups, gift cards, and music download–that has 145,000 distribution points through cellular-telephone companies, supermarket chains, big-box retailers, and other merchants. InComm will start by making rePower available to the rest of the 148-store Village Pantry chain in Indiana and Ohio. Village Pantry is a unit of Indianapolis-based Marsh Supermarkets Inc. An InComm spokesperson would not say how many locations InComm expects to bring to rePower in its first year, but added via e-mail that “InComm and MasterCard are already in talks with many of the merchants in InComm's retail distribution network, and we expect significant growth for the rePower network in 2007. Look for more announcements soon.” MasterCard and InComm would not disclose financial details of their arrangement. Revenues, however, originate with merchant-set reload fees paid by the cardholder. Issuers are not charged for reloads. Transactions are performed on standard point-of-sale equipment, says Ron Hynes, MasterCard vice president of prepaid product development in the Americas. MasterCard says rePower will enable its member financial institutions to better serve so-called unbanked consumers?people, including millions of immigrants, who don't have traditional bank accounts. General-purpose prepaid cards typically need to be reloaded at a bank, ATM, or employer's office. “One of the core market segments that we're focused on at MasterCard is to provide features and function for our customers?issuing and processing banks alike?[for] the 14 million households in this country that are not currently involved in traditional financial services,” Hynes says. The InComm spokesperson agrees most transactions will involve the unbanked, but says many consumers with bank accounts, as well as businesses, now use prepaid cards for financial management or other reasons, and hence could be potential rePower users. Most rePower transactions are likely to originate with cash, though retailers at their discretion could accept checks for reloads, he says. Other parties involved in rePower's launch include a merchant acquirer, Minneapolis-based Marshall BankFirst Corp., which also issued the card used in rePower's first transaction, and Salt Lake City, Utah-based prepaid processor Galileo Processing Inc.