A look back at the evolution of prepaid cards on Prepaid Technologies’ 20th anniversary

By Jennifer Tramontana, President and Founder, The Fletcher Group

Since 1998, Birmingham-based Prepaid Technologies has been in the business of helping companies solve payments challenges that make their businesses run better. In its 20-year history, the company has remained an innovative leader, developing deep customer relationships and adopting new technologies that continue to propel the prepaid payments industry.

I recently sat down with company founder and executive chairman, Thomas Mcculley as well as CEO (and employee #2) Stephen Faust to reflect on the first 20 years of the company, the changing landscape of the prepaid industry and what’s next as the company continues to innovate in a growing industry.

Jennifer Tramontana (JT): Thank you both so much to both of you for sitting down with me. As you reflect on your first 20 years in business, I’d love to know more about what inspired you to start Prepaid Technologies?

Tommy Mcculley (TM): In 1996, I remember reading an article in the Tampa Tribune about the trend that year of cashless programs at the Olympic Village in Atlanta for all the competing athletes and visitors. That was also the year where you started to hear about an explosion in the market for prepaid calling cards – obviously a time when cellphones weren’t as pervasive as they are today! That really brought to life this idea for an all-electronic inclusive banking platform which anyone could qualify for – and you started to see companies adopt these “convenience cards” as a payroll card for a lot of unbanked employees.

Stephen Faust (SF): In the formative years of the business, we focused on delivering the trifecta, a win-win-win for all involved that delivered innovative payments products for companies, and a solution that provided better financial access for their employees. And it was a win for us, a young company at the nexus of delivering a new product to meet those needs and connect financial institutions to consumers and employees in a stronger way. For me, coming from a marketing background, the entire prepaid space was extremely exciting as a way to tap into better reward and incentive programs.

JT: Who were the first customers that Prepaid Technologies worked with?

TM: We were very fortunate when we started, that we had some great existing relationships with Visa, thanks to connections that I had made in the banking industry. Our first official customer was Nestle for a program of promotional gift cards for a variety of their brands. That was followed quickly by Visa, who partnered with us on a promotion of “How the Grinch Stole Christmas.” From there, we begin to grow a lot of new marketing, rewards and rebate clients as the entire concept began to take off.

SF: That’s right, those two programs were the spark for our growth and evolution of how we could deliver branded currencies for our clients. It was the start of something really powerful for brands and marketers – putting the value of our client’s brands into the pockets and wallets for their customers.

JT: As a company for 20 years, I’m sure you’ve seen plenty of growth and change. In what ways has Prepaid Tech grown over the past two decades?

TM: In 1998, I started the company, was employee #1, and had only a laptop and zero clients. Since then, we’ve been fortunate to see growth and adoption of our concept to deliver strong customer service and relationships to grow the prepaid space. Our relationships with banks and distribution partners has changed and grown over the years. That has enabled us to build our capabilities, build a staff of driven employees, and expand our depth and quality products and services. Today, our corporate treasury management payment products are distributed through hundreds of banks and distribution channels throughout every state in the U.S.

SF: I joined the Prepaid Tech team in 2007. I think one thing that we did early on that truly helped foster our growth was to invest in systems to package solutions vs. being a single product provider. We’ve seen the path of growth and change lead us to delivering a more complementary suite of products, and delivering more value to clients by stacking technology and integrations with client systems to automate the delivery and fulfillment of both reward and payments products.

JT: Looking back over the past two decades, what do you consider the biggest accomplishments you’ve experienced as a company?

TM: I’m very proud of our success as a company that began selling a concept before there was a truly established industry. The commitment to stay the course and build our company and grow the prepaid industry with a passion and excitement was something that all of our team members, even early on, have shared throughout the growth of the company.

SF: The longevity of the firm is very unique in our space. Companies either go to the moon or fizzle out. Getting acquired was the name of the game as the industry started to gain traction, but we’ve created a steady model of growth and maintained control. One thing I’m really proud of is our commitment to strong customer relationships and support. We’ve always maintained strong customer retention and that’s a testament to the team we have who are so committed to bringing top-tier support for our clients and remain committed to our long-term growth strategy.

JT: What are some of the biggest changes you’ve seen in the industry since you opened your doors 20 years ago?

TM: This is an industry that was in its infancy when we started. I’ve seen billions of dollars annually flow through this industry and it has transformed the way business is conducted for many. As a program manager, we must adhere to a high level of fiduciary compliance and meet regulatory requirements, and I’m proud that we’ve remained disciplined in our approach to operate in a conservative and responsible manner. I think the industry is in a good regulatory environment now, but as most things, it took several evolutions to get here, and it has taken well-run firms like Prepaid Technologies to demonstrate that if left to our own devices, we can develop better products in a more cost effective and consumer-centric way.

SF: The underlying product has fundamentally remained the same. The biggest change is the technology and systems available to our clients and to consumers. Aside from that, it’s how the product has become more prevalent, shifting with the new demands of business to drive broader acceptance and more configurability. Ultimately, consumer and business appeal is 50 times what it was even 10 years ago. Back then, a lot of our product and value was conceptual, but now we can draw clear lines and cost advantages of using prepaid for both payment and reward applications.

JT: And to piggyback on that, what has NOT changed? Are there any elements of the business (or your customers’ needs) that have staying power? For better or worse?

TM: The consistent underlying need is that companies are looking to make payments more seamless and cost efficient. Better and faster is still the mantra, but our focus has always been to deliver high-quality customer service and products. For 20 years now, we have concentrated on meeting customer needs and developing products to better serve them.

SF: The core use of the product has not changed. It’s evolving – but a paycard today is the same as it was when Tommy first started. From a business standpoint however, customers are savvier, they want integrations, new technology and best-in-class systems. We hear more from our clients now about wanting to find new ways to deliver value to their organizations. Reward cards continue to have such strong value for companies, they’re now the gift of choice for many brands and I don’t see that shifting in the future.

For cardholders – they know what these products are, and they are seeking them out more than ever. The card has to work perfectly, it needs to look great, it has to compare favorably with all the other financial service options they see. Consumers want mobile options now more than ever.

JT: Tommy, with your background in the banking world, I’m curious too, what would you say are the biggest changes that the banking industry has seen over the past 20 years? How does Prepaid Technologies fit into those changes?

TM: Banking struggled through the financial crisis in 2008 while our industry and company actually grew. The over-regulation of the banking industry as a result of the crisis has hampered most banks, up until recent political changes that are beginning to allow the industry and business to move forward. Our industry was swept up in some of the previous regulation which ultimately created greater cost, yet has not hampered our growth. 

JT: And Stephen, from a marketing and advertising standpoint, how has that industry shifted, especially knowing it has such as strong connection to what Prepaid Technologies offers from a rewards and incentive standpoint?

SF: I think if you look back to around the year 2000, everyone was investing in big solutions and programs much more so than they are today. We’ve seen a shift now to more Software as a Service style models with organizations looking to embed prepaid products into their business work streams for both pay and reward, in a low-cost approach with, low barriers to entry. This has certainly helped us as we shift our model as well – we’re now focused on a low/no-cost platform with API integration and software as a way to engage users easily, and drive added value and customization across many of our services and platforms.

JT: Lastly, I’m going to ask you to get out your crystal ball. Looking ahead 20 years – where do you see the industry headed, and how do you envision Prepaid Tech playing a role?

TM: I think that we’ll continue to see electronic payments as a fertile and valuable resource for business and consumers. We’re proud of the work we’ve done to research and invest in technologies and I see Prepaid Technologies playing a key role in the future as a leader and innovator in support of prepaid systems.

SF: Like Tommy said, I think the expansion of digital payments will certainly continue. My crystal ball is still hazy about whether or not plastic will have a seat at the table 20 years down the road, but I know that digital payments via phones, wearable devices and new technologies will continue to gain traction. Peer-to-peer and B2B money movement will certainly be a key trend, likely at a slower pace than most people think. For Prepaid Technologies, we’re focused on remaining locked into the emerging trends, staying ahead of the curve in terms of technology and innovation, and providing a choice for our clients.

About Prepaid Technologies

A pioneer in financial technology, Prepaid Technologies has been providing innovative electronic payment solutions including payroll, expense, gift, reward and incentive card products to employers, financial institutions, and government agencies for more than 20 years. Learn more at www.in-prepaid.com.

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