Prepaid services are revolutionizing the way customers do business today. From unbanked customers to students and others looking to reduce their outstanding debt, prepaid debit cards and bill pay services offer customers a payment solution without the drawback of monthly interest charges.
Retailers agree that choosing a vendor that will work with your chain to achieve success is a vital quality in a prepaid provider.
As the national category manager for Pilot Travel Center’s 310 stores in 39 states, Mel Beech targets the product needs of a customer base that spends four to five days a week or more on the road.
“While professional drivers and travelers are on the road they still have cell phone bills, utility bills and car payments to pay. They need a means to pay those while they’re on the road,” Beech said.
Solutions for On-the-Go Customers
To further service those customers, Pilot launched epay’s bill pay program—offered through epay’s affiliate, Continental Exchange Solutions Inc./RIA Financial Services, a licensed provider of bill pay services—at the end of August to help truckers and other long distance travelers take care of business conveniently while away from home.
The card required for the service is free, and customers register it by calling a toll-free number. Each bill pay transaction incurs a minimal transaction fee. “We swipe the card and all the service providers the customer registered on the card appear on the terminal [such as their phone company or local utility] and the customer advises, ‘I want to pay $50 on my cell phone bill,’ and with one swipe the payment goes out to that particular biller,” Beech said.
While the service is still relatively new, Beech believes it will have a strong following with his customers. “It fits the needs of our customer base really well and will help them continue to conduct business while they’re traveling down the highway,” he said.
Beech also noted the service is helpful for customers without checking accounts, as are the NetSpend prepaid debit cards Pilot offers, which became a hit with customers when they were first offered about a year ago.
Prepaid debit cards open purchasing capabilities to low-income families, unbanked and underbanked customers, as well as people with poor credit or no credit at all. Customers load money onto their prepaid card and can make purchases, pay bills and even shop online. With 53 million (25%) of Americans without bank accounts and 109 million (50%) of Americans under-banked, according to MRI data, the service is a valuable one to offer.
Brian McCarthy, purchasing manager for Blarney Castle Oil Co., which operates about 90 EZ Mart stores in Michigan, offers a wide range of prepaid and payment products through epay, from wireless and long distance, to gift and debit cards. Thus far customer reaction to the prepaid category has been strong.
“We’ve seen nice growth in the category since program inception in February 2007,” McCarthy said. “We had not yet realized the full potential of the prepaid category prior to launching with epay, so it has provided us with a new profit center. Customers are coming into our stores specifically looking for the epay product offering, which translates into an additional revenue stream for our locations.”
As Pilot is cultivating a loyal bill pay business, it found the cellular prepaid wireless service fits its consumer base as well.
“Customers on the road have the opportunity to reload minutes onto their prepaid phones, and we have several different providers they can choose from,” Beech said. “Our customers know we provide these services at each of our locations, which also helps increase frequency of customer visits.”
Jaco Oil, which runs 53 Fastrip stores, also has seen success with its wireless prepaid program through Coinstar. With stores in California and Arizona, Fastrip wanted a program that could provide a flexible and continuous assortment to cater to a diverse demographic.
“We needed a program that was good for all our stores and that provided consistent service, so we could restock cards and have someone come out and explain the program to our employees,” said Fred Faulkner, Fastrip’s sales and marketing manager.
Before finding success with Coinstar 10 years ago, Fastrip tried cards from smaller players in regional areas in the southwestern U.S., but due to a lack of consist product, it didn’t work out. Some products would fail or be discontinued, while others didn’t always work.
It’s important, Faulkner said, to have a program that offers the flexibility to tailor the phone card selection to the market you serve. For example, a farming community might have a strong Hispanic population interested in calling Mexico, while another area might have a high population of Filipino residents who are looking for an inexpensive way to call the Philippians and it’s important to have card that cost-effectively reach their destination.
Another key factor is to make sure you are getting a reasonable rate of return on the cards. “In the past we’ve done the prepaid cards where you buy them and then sell them. Now we don’t get charged the cost of the card until we sell it, and that’s a big thing in a retail environment because you’re not putting money out there first,” Faulkner said. “If something were to happen to the cards and you prepaid for them you could be stuck with all that inventory.”
The Gift That Keeps Giving
Gift cards continue to rise in popularity as access to them has been streamlined through new concepts like retail gift card malls. Now that c-stores have begun offering an array of gift card options, customers can minimize shopping trips and buy cards for multiple mall stores all at their local convenience store.
Fastrip cashiers encourage customers to purchase the products by reminding them of the product offering. “They might say, ‘Do you have a birthday coming up this weekend that you need a gift card for,” Faulkner said. That type of employee-customer interface has helped drive sales at the chain.
Offering a variety of mall store as well as a propriety gift cards can drive customers into the stores, especially during the end of the year.
“The gift card part of our business is primarily a fourth quarter, holiday business for us, much more so than other times of year,” Beech noted.
When it comes to adding a prepaid offering, retailers agree operators need to do more than just stock display racks. Promoting the products is the key to gaining high sales volumes, and vendors should be there to lend their expertise.
With help from Coinstar, Fastrip offered its employees an incentive program for about 90 days to get its program rolling. It awarded cashiers 10% on the dollar for the amount of prepaid cards they sold. It inspired cashiers to learn more about the products and talk them up with customers. The incentive program helped the prepaid products gain momentum and Fastrip was able to maintain sales from there on out.
“If the clerks understand the products, then they’re able to explain them to the customer and identify the products customers really need instead of selling them something that may not work for them, which is important because customers remember that,” Faulkner said.
Coinstar also provided fact sheets for employees to use to answer questions, such as how much it costs to call different countries.
Pilot has received help from epay in marketing their products through displays and through advertisements in the company’s Pilot Challenge magazine, which is given free to customers. CSD