Just three weeks after its parent company struck a novel deal with PayPal Inc., The Star Network pushed the boundaries of PIN-debit a bit further by unveiling a prepaid card reload service for ATMs and point-of-sale locations. Star, a unit of Atlanta-based processor First Data Corp., claims its load and reload service is the first one by an electronic funds transfer network and has a business-process patent pending on the system. Star aims to build new transaction volumes by enabling prepaid card issuers and their program partners to offer their customers the ability to reload existing prepaid cards through a variety of options such as cash, check, or even funds transfers from demand-deposit accounts, Julie Saville, Star's vice president, product development, tells Digital Transactions News. Star has supported so-called open-loop prepaid cards since 2001 and also has a biller-direct payment service. Some 500 prepaid card programs sport the Star logo, “and it's growing,” says Saville, declining to disclose the total number of cards. But Star's clients are looking for new sources of transactions, especially at ATMs, she says. The ATM industry has suffered in recent years from market saturation and competition from POS locations that give customers cash back on PIN-debit transactions. “We took a look at the [prepaid] programs and we said we need to enhance our functionality to meet the needs of these programs going forward,” she says. While many of Star's prepaid cards are payroll cards that are reloaded through direct deposit, the market for the new service, dubbed Star Reload, is the “spontaneous reload,” Saville says. That would include cash, miscellaneous checks consumers receive, and DDA account transfers. Most reloads at POS locations are likely to involve only cash. At ATMs, “the form of the deposit is up to the ATM deployer,” says Saville. Star Reload ATMs and other locations will have a special logo indicating the service is available. Aite Group LLC payments analyst Adil Moussa says the reload service might appeal to employees who get payroll cards and want to add other funds to them. “Other than that, it's a nice feature but I don't know who they're targeting,” he says. But Saville says the reload service will appeal to some consumer segments that include not only unbanked or underbanked consumers, a core constituency of prepaid cards, but also young adults oriented toward debit cards. “The youth [are] quickly demanding more functionality,” she says. No users have been announced yet, but Saville notes that clients have been asking for new services ever since Star recently updated its offerings in the prepaid niche. “We know there's interest out there,” she says, adding that some financial institutions wary of the credit card market with its new regulations are taking a look at prepaid cards. “We have not been very visible recently, but since we re-launched and revamped our prepaid program, we're getting interest out of the blue.” Star would not disclose pricing, but Saville says, “We have come up with a balanced approach” to encourage issuers and acquirers to embrace the reload service. Many of Star's prepaid cards also carry Visa or MasterCard logos, but “we probably have a higher percentage of prepaid cards that are single-branded,” Saville says. Earlier this month, PayPal announced a deal with First Data that is the initial offering in PayPal's new Debit Access program. Under it, Star member financial institutions can offer a PIN-debit funding option to customers for their PayPal accounts (Digital Transactions News, Oct. 8).
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