Six Ways Prepaid Cards Help Grow Member Relationships

Sponsored by LSC

Developing profitable relationships is key to the health and growth of any financial institution. Because they are member owned, this is particularly true for credit unions. Below are six ways prepaid cards can help your credit union develop these valuable member relationships.

1. Prepaid cards help establish ongoing member relationships. Regular, loyal members are at the heart of the credit union movement. Prepaid gift cards allow your organization to connect with members around holidays and important life events. Prepaid cards often also used as budgeting tools, according to a Pew Charitable Trusts report, so offering these cards can help your credit union become an integral part of members' financial management.  

2. Prepaid cards create value for your members and credit union. According to The Pew Charitable Trusts report, nearly 60 percent of people using prepaid cards also have a checking account. Expanding your product offerings to include prepaid cards gives current members more of what they want—a safe and convenient way to manage their money—while adding additional sources of income to your credit union. 

3. Credit unions can reach new markets with prepaid cards. 

• According to Pew research, prepaid cards are used primarily by people under fifty, and millennials make up the second largest user group. Prepaid cards are a great way for your credit union to appeal to millennials. 
• Serve the underbanked. Prepaid cards can help bridge the gap and create a way for your credit union to serve the underbanked. The same Pew study reveals over 40 percent of consumers using prepaid cards don’t have a checking account. Most of this group wants to eventually open an account to start saving money or apply for a loan. Prepaid cards give your credit union an opportunity to reach out to this group now and in the future.  

4. Members feel secure with prepaid cards. Information security has become increasingly important to consumers as online shopping continues to grow. According to PwC research, 85 percent of consumers see cybersecurity as the most significant risk right now. Since prepaid cards are not connected to a member’s bank account, they offer the same convenience as a debit card with less risk.

5. Prepaid cards are an alternative to credit cards. The Pew research shows the prevention of credit card debt as one of the top reasons people use prepaid cards.

6. A full-service prepaid program can help reduce fraud. Security is important to your members and your credit union, which means it needs to be at the forefront of the prepaid program you select. Look for one with industry-leading fraud prevention services. 

The convenience offered by a prepaid card program is also a key to success. The ability to easily check balances and purchases online are must-haves. Mobile functionality, such as loading funds via remote deposit capture, continues to increase in demand. Also, consider the quality of customer service support available to both to your staff and members. Look for a program provider whose services include setting up and processing your prepaid cards as well as marketing. A 24/7 call center can also be helpful to your members after business hours. A full-service prepaid card program gives your credit union the support needed to build loyal members.

Where to Start

With the holiday season approaching, gift cards will be a popular offering among members. In fact, gift cards have been at the top of consumers’ holiday lists for over a decade, according to the National Retail Federation.  

But giving your members a product they want isn’t the only reason to offer gift cards this holiday season. Gift cards can help reach important new markets, including millennials—who make up 89 percent of gift card consumers, according to a 2018 Blackhawk Network study. Also, gift cards branded with your credit union’s logo and given by members to friends, family and coworkers help promote your CU to a wider audience.

This holiday season is the time to shop for the right prepaid card program for your credit union. LSC offers a full-service program that will stand out to your members. To learn more, contact the LSC sales department at 1-800-942-7124.

Kathryn Misner is the prepaid product manager for CUES Supplier member LSC. Currently she oversees the prepaid implementation of new credit unions as well as the technical development and product growth for the prepaid programs. Misner has been with the LSC Prepaid Department since the start of the program and has been with LSC for 13 years. She earned her B.A. in English from Northern Illinois University.