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Why is Customer Service So Bad with Prepaid Cards?

Adam Rust's picture

Posted October 16, 2012

Consumers can get a lot from their prepaid debit card, but one exception to that rule is good customer service. With almost every instance, calling a prepaid card company is a difficult exercise.

I call customer service regularly. For me, it's a good way to ask basic questions about new products. While it

would be possible to go through media relations, I prefer to swim in the same sea as everyone else. After all, if you cannot get an answer from customer service, then is it really honest to believe that other people are doing any better? For better or worse, the people who answer the phone at a call center are generally the only human connection between cards and their users.

There are metrics used to define the quality of customer service: Number of rings before the phone is picked up, number of hangups before a call is answered, number of times the first CSR resolves the issue, number of transfers per call (more is bad), number of minutes per call (companies want it solved quickly), and others.

A friend of mine in knowledge management at one of the largest investment brokerages in Switzerland told me that customer service is usually seen as a cost center. By that definition, that kind of opinion about customer service is akin to the way that former Ohio State coach Woody Hayes felt about passing: three things can happen...and two are bad. With prepaid, while it might be a plus that a customer is helped, it's also likely that the customer is not profitable in the first place and its certain that the cost of the service did not equal the fee charged for it.

Now, my knowledge management friend justified his $200,000 salary because he spent his time finding ways to drive down costs without reducing service quality. He realized that about twelve percent of all calls were made merely to reset a password. Given that it was such a frequent problem, he found a way to make it simpler and cheaper. Generally most prepaid card program managers have done the same thing.

The hard part is that only a few customers are going to bring in enough revenue to justify the cost of a good customer service contract. Again, my friend in KM had an interesting fact to offer: his company spends eight dollars per call. Ouch. Given that so many cardholders are done with their account in less than one month, only a few stand a chance to ever justify an eight dollar call. Many prepaid card companies set up moats to mitigate some of those costs. It can be impossible to reach a person by phone at Rush, NetSpend, or others without an account number.

I do think that customers should be able to speak to a 'real live person' (why do we now need a modifier for person?) for free, but I also understand why so many PMs choose to charge fees for the service. Ultimately I tend to believe that a fee for service feature is acceptable, provided that the service is of quality.

My issue is really more about service prior to opening an account. People should be able to gain some clarity about a product before they buy it. Fee schedules are really an antidote to the typical 8-point font 27-page cardholder agreement, but just knowing prices is only a starting point. How many people know that Chase is the only card without required arbitration or that there are no AMEX financial centers in any of the AMEX travel offices in North Carolina? You simply cannot know that information without making a phone call.

More than once, I have relied on the answers given to me by a CSR in order to write this blog, only to later hear from an executive that I had things wrong. In time, I have learned that I need to make a copy of all of my chat room conversations. I had one call go like this:

  • Hello, this is COO Tom for XYZ card. This morning the FDIC called us because of something you wrote on your blog yesterday. I'm calling because it was not true.
  • Me: Really? I'm glad to hear that. I'm glad to hear about the FDIC and I am hopeful that your card is better than I had been led to believe.
  • COO Tom: Yes, well, you need to clarify. Where did you hear that?
  • Me: Well, I got it from your company. I contacted the CSR on your web site. I chatted with Kathy. Here, let me email you the transcript from our "chat."
  • COO Tom: Kathy? I've never heard of Kathy.
  • Me: Kathy is the voice of your organization. She represents you to all of your customers.
  • COO Tom: You know, if I knew who she was, I would fire Kathy.
  • Me: Well, how well do you know the people in your CSR department?
  • COO Tom: No, I've never met them. We hired them through a subcontractor in India. Last I heard they were from Pune.
  • Me: Got it. Well, here's a copy of what she told me. It's in the fifth section where I verified the part about how you were breaking some federal laws.
  • COO Tom: Maybe we should get new customer service people.

I said that customer service was underwhelming, but with a few exceptions. American Express, a company whose prepaid card product I have written about with consistent skepticism, is hands down the best card for getting a thorough response to any question. I have spent up to half an hour with some of their representatives. Their people know their cards inside and out. But that's the exception.