Unbanked users are hard to convert into paying users. A large number of users who play games on the web or on devices do not have credit cards. This leads to a difficult problem for games — how do you get these users to pay in their games?
A common problem that people have approached this with is prepaid cards. Given the number of unbanked users playing games online, the market has seen a proliferation of such branded prepaid cards. Given the tiny shelf space they take and the potential for upside, these cards present a huge opportunity for retailers.
Prepaid Cards in Store
However, these cards bring with them several problems. First off, this is probably the least user friendly experience around. The time when the users are most likely to want points is when they are playing the game. The user has to then figure out which store they can get a card at that’s open at that hour, find the store and hope that the store carries it in stock.
Secondly, many games don’t carry their own branded cards. They rely on a third party to provide a game card or prepaid card. This third party is typically helped by a company that owns the distribution to several retail stores (e.g., Blackhawk or InComm). What the developer and the user get is an experience that involves layers of middlemen who all take a share from the transaction — not counting the desire to intercept the user experience to attempt to “own” the user.
Finally, the user typically has very limited choice in what they can buy. Most prepaid cards come in fixed denominations. This often leads to money being left over on cards that is never consumed.
The way most pre-paid cards work don’t help the developer or the end consumer — they involve too much friction, far too many layers, are too inflexible and aren’t consumer friendly.
Do you agree? Do you think there is a better alternative?
Tags: custodial accounts, electronic payments, gaming, gift cards, Payments, prepaid cards, retail, Social, unbanked
What’s wrong with a branded prepaid card? By “branded” I mean Visa, MasterCard, or American Express; so it’s usable anywhere a standard Visa or MasterCard or American Express is usable.
There are a number of these that come to mind. The GreenDot card (and GreenDot MoneyPak). the WalMart MoneyCard are a couple of quick examples. Both of these are refillable at a number of retail locations, they’re just not retailer-branded, as those in your kiosk picture are. Also, H&R Block has its Emerald Card (put your tax refund on it), and American Express has branded gift cards available WalMart. GreenDot one of the largest issuers of branded Visa and MasterCard prepaid cards.
The unbanked population is large. Lots of Financial Institutions look longingly at it. These companies all understand that. The downside is that there are cardholder fees involved, but when a consumer doesn’t have a bank account, it’s about the only way to get a Visa, MasterCard, American Express with ubiquitous acceptance. As far as any merchant is concerned, it’s just a normal payment card that gets authorized using the normal facilities. Same for the cardholder. These cards are usable wherever they see the Visa, MasterCard, or American Express brand. Same thing online.
Check out the following:
https://www.walmartmoneycard.com/walmart/homepage.aspx
http://www.walmart.com/cp/Gift-Cards/96894
https://www.greendotonline.com/contents/login.aspx
http://www.paymentscardsandmobile.com/research/reports/Management-Report-Unbanked-USA.pdf
I think the problems you’re describing have been solved, at least by selected branded-card issuers.
Rick,
Pre-paid cards definitely solve the problem, but as you said at a fairly high cost.
The problem we were looking to solve is enable users to pay with much lower friction, and not rely on retail distribution of cards to collect cash.
The range of pre-paid card solutions is huge, and clearly a large industry.
Vikas