This is the moment in prepaid where companies are starting to distinguish their products by the depth of their functionality. Pricing is coming down everywhere, so even as maintenance and transaction fees become less and less, cards still cannot generate profile on cost alone. This is bad for any card that might have previously found a customer base because of low fees, given that they could not capture cash flows from loads or find customers from contracts with national retail chains. It is great
for the consumer. Today, cards are offering all kinds of services, from remote deposit to a bucketed savings account to a cell phone top up program.
If those formerly-price competitive firms wanted a miracle, the skinny green Nexxo kiosk might be their best hope.
Nexxo has a new ATM-style kiosk that solves a number of transaction needs in one location. From a Nexxo Money Station, a consumer with a GPR card can load cash, cash a check, deposit a check, send a remittance, pay a bill, and top up a prepaid cell phone account.
I had a chance to stop by the Nexxo booth where one of their representatives walked me through the user interface. Here is what we did:
- paid a bill to "My Power Company" for $35 plus a $1.50 fee. Since I was posing as a repeat customer with a GPR card that identified me to Nexxo, the kiosk arranged a payment to my account without requiring me to put in my account number.
- Pulled down my account history with My Power Company.
- Loaded $150 to my GPR card from a paper check: cost $2.
- Used funds from my account to purchase a money order for $20. Cost $2.50
- Added $20 to my prepaid cell phone account in Mexico. No cost.
These were default fees which are collected at the terminal and then apportioned to the variety of different entities that put together the mechanics of the payment. In a white-label relationship with a small consumer bank or a program manager (for example), it would be possible to edit those prices to a different mix.
There are a few precedents to the Nexxo. Itautec runs a system of kiosks in Brazil that can manage more than one hundred types of transactions. Itautec systems will pay bills and send remittances, but they can also take applications for car loans and mortgages (as they exist) from the kiosk. The Itautec is everything and more. However, Itautec operates in a very different environment. I think their story shows that these kiosks can do more than just dispense cash, but it is not fair to expect that there will be a similar suite in the United States in the near future.
H&R Block is putting its company-branded Nexxo machines in to a pilot in Charleston right now. Granted, Emerald is not a small player in prepaid. Nonetheless, they do not have their own reload network. They derive customers from their tax business, but that is a once-per-year harvest. It goes without saying that there will be lots of spending on Emerald cards in March. What is less certain is the possibility that those cards will remain active through October.
The Nexxo serves as the physical presence for its Emerald suite. Block isn’t charging for any of those services, probably because they are hoping to maintain a longer relationship with the customers that initially come to the company for tax preparation.
In the continuum between a full-service checking and a bottom of the barrel minimum-functionality prepaid card, the Nexxo probably comes closer to the former. Nonetheless, it would be improper to characterize it as a stripped down branch bank. It is doing things like cell phone top ups that banks are miles from even considering.
More significantly, though, buying into this kind of service could help a smaller issuer/program manager to catch up to the Green Dots and Bluebirds of the world.