Network Branded Prepaid Card Association CEO and President Brad Fauss explains the regulatory and educational challenges facing prepaid stakeholders to PaymentEye’s Sarah Gill, live from our Finetics™ Studio on the exhibition floor at Money 20/20.
Sarah Gill, Reporter: Okay. And are there any kind of big innovations in this industry that you're excited about?
Brad Fauss: Yes. I mean, every day there's a new product feature or functionality that someone's trying out. Some of them work, some of them don't, and the challenge we have is that as new regulation comes out, the ability to be innovative with new products and features and functionality becomes harder and harder. So that's the message we keep trying to get to the regulators is, "Let the industry grow, let us show you new and innovative products, and don't ever regulate until you see what direction the industry's going in."
Sarah Gill, Reporter: Right. Because I guess there's a degree of experimentation, still.
Brad Fauss: Absolutely.
Sarah Gill, Reporter: And what do you think--I mean, firstly, how far along in the evolution of this industry do you think we are? Do you think it's still at the beginning, or do you see it as relatively mature?
Brad Fauss: It's getting closer to the mature cycle. I think you're seeing a lot of acquisitions in the space, big companies buying other big companies. So there's been a lot of consolidation in the industry. But then there's also been a lot of innovation with things like mobile payments, because often prepaid cards or prepaid accounts are the backbone of mobile products. You also have things like person-to-person payments that look like they're going to be regulated the same way under the CFPB proposed rules. And so although the prepaid card itself as a form factor, I think, is becoming relatively mature, all the other products that are based on that prepaid infrastructure are growing, with new and innovative things every day.
Sarah Gill, Reporter: Okay. And then what is the kind of bigger picture of this? I mean, where do you kind of see it being in maybe 10 or 12 years' time?
Brad Fauss: I think it's going to keep growing. There's predictions that open-loop or branded prepaid cards are going to exceed closed-loop cards here fairly soon. And I think you're going to still see that trajectory upwards. You've got a population of approximately 67 million Americans are unbanked or underbanked, and this is a product that they often want and need. And then the Millennial group keeps growing, the demographic that doesn't want to go into bank branches. And I think that's going to continue to grow and continue to spur new and different products and services that are easy for them to use. The convenience is the key from the consumer perspective, I think.
Sarah Gill, Reporter: But I think the interesting thing, or one of the interesting things, around sort of banking the underbanked is that maybe until recently, people--or the wider perception was that it was an issue facing kind of developing countries. It's actually quite an acute issue in places like the US and, you know, in Europe as well, right?
Brad Fauss: Yes. I mean, let me give you a perfect example. I remember myself, a few months ago, went into the cable company to get another receiver for my TV because it had broken. And of all the people in line--there were approximately 12 or 13 people in line--70% to 80% of them were there to pay their bills because they didn't have a financial services product. So they would get paid, they'd cash their check, they'd bring their cash in and to pay their bills directly. So it's that population that so desperately needs a product like this.
The opinions, findings, or perspectives expressed in this content are those of the participants and do not reflect the official policy or position of The Bancorp, Inc., its affiliates, or its or their employees.