Two new prepaid debit card programs are being unveiled at some food retailers to make "plastic" money vehicles more available to those unable to obtain traditional credit or debit cards.
Earlier this month, Next Estate Communications, Monrovia, Calif., introduced a reload platform allowing consumers who purchase several other unaffiliated debit card brands, as well as its own Green Dot branded prepaid Visa/MasterCard debit cards, to reload cash value on the cards at any retail location offering the Green Dot cards.
The Green Dot cards, introduced three years ago at Rite Aid, were launched in the third quarter by Food Lion, Salisbury, N.C., chainwide, and are sold at Pathmark, Cumberland Farms, CVS, The Pantry and Radio Shack stores, among other outlets. They are also available through 2,000 Coinstar coin-counting kiosks, including some residing in Albertsons stores, said Steve Streit, chief executive officer, Next Estate. Safeway markets private-label prepaid debit cards processed through the Green Dot network, said Don Kingsborough, CEO, Safeway Marketing Services and Blackhawk Inc., a subsidiary of Safeway that markets gift cards. Safeway is not part of the Green Dot reload network and is still evaluating it, he said.
Thus far, six debit card issuers, accounting for 500,000 prepaid cards, have signed onto the Green Dot network, said Streit, who said his goal is to have 10 million cards on the network. Names of the issuers could not be confirmed last week.
Separately, Cashworks, Dallas, a division of GE Consumer Finance, plans to install self-service check-cashing kiosks in "at least one" supermarket chain by February, said Will Sowell, general manager, CashWorks. The CashWorks kiosks, provided by Source Technologies, Charlotte, N.C., will convert the cash value of paychecks to a prepaid debit card usable at ATM machines or retail outlets nationally. Shoppers will also be able to pay bills and wire money with the kiosks.
The CashWorks kiosk will require a driver's license as a form of identification. It will photograph the user and run a risk profile on the paycheck.
CashWorks currently provides the check-cashing function on 7-Eleven's Vcom kiosks, which return cash rather than debit cards. It plans to offer a modified debit card kiosk at other convenience stores. The company also establishes traditional check-cashing systems at retail customer service areas.
Prepaid debit cards are directed at "young people who have yet to establish credit, the underbanked and the unbanked," said Kingsborough. In addition to private-label debit cards, Safeway also offers the Visa Ultimate Direct prepaid debit card, issued directly by banks, and All Access Mastercard prepaid debit card. "The [prepaid debit card] market is very small but it's going to grow."
In the U.S., the unbanked population includes more than 30 million people who do not have a checking account, said Miles Busby, president, Source technologies. Streit said 70% of credit card applicants are turned down.
At Food Lion, the Green Dot cards "are doing well. We're seeing a lot of customers reloading the cards," said Jeff Lowrance, a Food Lion spokesman.
At most outlets, Green Dot card information is displayed near the checkout, where cards are purchased and reloaded. Initially, "temporary cards" are issued, with actual cards mailed to purchasers within 10 business days. Card denominations include $20, $50, $100, $200 or $400. According to Streit, the consumer pays a service fee of $9.95 in addition to the amount placed on the card. The retailer "on average" keeps half the service fee, he said. The reload fee is $4.95, of which the retailer gets 40%. He said the Green Dot network "integrates with any retail POS system," tapping the network used for prepaid phone cards or gift cards.