Do you use a rubber band and your pocket rather than a bank account to store cash?
Or do you hide money under the mattress? Are you too busy to balance your checking account? Want to give your kid in college a debit card with limited balances? Need a safe way to carry cash for a trip?
If you answered "yes" to any of these questions, Nevada Federal Credit Union and some of the country's biggest retailers have a product designed for you.
"It's like a bank account in your pocket," said Jerry Welch, chairman and chief executive officer of nFinanSe of Tampa, Fla.
He runs a startup company that offers prepaid debit cards and spoke to me during a recent trade association conference in Las Vegas. A nFinanSe spokeswoman said the company sells its prepaid cards in Nevada through Coinstar, which has vending machines that convert coins into paper money.
Welch sees a giant market for his debit card products. A 2009 government survey shows that 30 million households or about 60 million adults are unbanked or underbanked. Underbanked households include those who have a bank account but use check cashing services, payday loans, rent to own or pawnshops.
Wow Card Services, a startup company based in Las Vegas, was touting prepaid cards a few years ago. It was acquired.
Some of nFinanSe's competitors are giant. Wal-Mart offers a prepaid debit card through Green Dot Corp. of Monrovia, Calif. Wal-Mart didn't return calls for comment. A Green Dot contact declined comment and pointed to a company's prospectus filed with the Securities and Exchange Commission.
Green Dot is preparing an initial public stock offering for $150 million with underwriting assistance from J.P. Morgan and Morgan Stanley. The company believes it is the country's largest provider of prepaid debit cards and offers the cards through Walgreens, CVS, Rite Aid, Kroger, Radio Shack, Kmart and 7-Eleven.
Green Dot reported $234.8 million in revenue and $8.2 million in profit for last year.
Closer to home, Nevada Federal Credit Union is gearing up to promote prepaid debit cards for its 85,000 members.
"We think it's going to be very, very popular," Nevada Federal CEO Brad Beal said.
The credit union has offered its prepaid debit card for two years. Although it has only several hundred members using the product, Nevada Federal hasn't marketed the product heavily yet.
Here's how it works: Membership in Nevada Federal is a requirement but people who live or work in Clark County and Pahrump are eligible to join the credit union with a $5 deposit in a savings account.
Go to one of the Nevada Federal branches to join and also to sign up for a prepaid debit card. Up to $3,000 can be loaded on the card. There's no fee for issuance of a prepaid card.
Nevada Federal uses Visa for the product. So prepaid participants can use the cards anywhere Visa credit and debit cards are accepted around the world. In fact, some members get prepaid debit cards to take on vacation because they need not worry about someone using the card to steal their identity, Beal said.
Nevada Federal protects members against prepaid card losses if a member can document the card was stolen or lost.
Members can sign up for direct deposit of their wages and Social Security benefits to the prepaid card.
Members can reload the card anytime by depositing cash at a credit union branch or drawing funds from another Nevada Federal account, but Nevada Federal collects $2.95 for all but direct deposit reloads. Nevada Federal charges a $2 fee for withdrawals from automated teller machines, plus any additional fee imposed by the ATM owner if it is not a Nevada Federal ATM. The credit union deducts $3 monthly from the account for maintenance.
Debit card users can monitor their card use at the Nevada Federal Web site for free or pay a $2.95 fee for automated information by telephone.
Nevada Federal charges no fee for purchases made with the prepaid card, and members can avoid the ATM fee by obtaining cash back with purchases at many merchants.
In mid-February, Nevada Federal introduced a similar product specifically designed for consumers who have problems managing checking accounts, said Assistant Vice President Maria Dlouhy said.
Leave a comment