American Express EVP (Global Prepaid and Alternative Payments) Stefan Happ recounts the history of and reasoning behind prepaid growth with Payment Eye’s Sarah Gill in our Finetics™ Studio, live from the Money 20/20 exhibition floor.
Sarah Gill, Reporter: I'm joined by Stefan Happ, Chief Commercial Officer of Enterprise Growth at American Express. How about we just kick off by talking a little bit about your role in building American Express's prepaid service?
Stefan Happ: Actually, I was part of the initial wave of us building the prepaid business more than 10 years ago, when we started the gift card program here that we're now selling through 60,000 retail locations across the US. And as the years went by and the business grew and then plateaued, we needed to innovate out of that single-use gift space, and then came upon the use case of creating reloadable prepaid programs, prepaid cards, that really were designed to provide an alternative to more expensive bank accounts that were accessible to many people, not just those that qualify for regular bank accounts here in the US.
Sarah Gill, Reporter: Okay. And I'm kind of interested. Why did it make sense, you know, in that first situation, to launch at that time? Where was that back up in the market where that made sense for you guys?
Stefan Happ: Look, in the US, the market of people that don't, that don't get served properly by the traditional financial services and banks numbers in the tens of millions. There were other people, other organizations, that spotted that market first. But American Express really had been playing primarily in the credit and charge card space, which by definition means the credit scores of these products require that you can only attract a certain segment of the population. With these prepaid products, we're able to offer American Express branded products, with all the benefits and features that American Express brings, offers that American Express brings, to literally virtually everybody in the United States.
Sarah Gill, Reporter: Okay. And so I'm kind of curious. Obviously, the kind of use cases are developing quite quickly for prepaid. What did the opportunity look like at the beginning? How did that market look, and what does it look like now?
Stefan Happ: So in the beginning, actually, we started with thinking about cards for teens as the first step to get a bank account. Because it seemed like something that was really underserved, right? In the US, there are very few bank accounts for people under 18, actually. But it turned out that the far greater demand, actually, was with adults in the 18-to-45 range in a demographic segment that was probably far larger than we had anticipated, given the customers we historically served.
Sarah Gill, Reporter: Okay. And what are the kind of key challenges around innovating in this space, as you see it?
Stefan Happ: You know, really, we're competing with cash and checks, and those payment forms are surprisingly persistent, in the US in particular. So you know, given the value that we provide in terms of very low fees, very transparent fees, a huge amount of services, it's surprising that there's still such a prevalence of cash and checks around, in my view. That's probably the biggest surprise.
Sarah Gill, Reporter: And do you think they'll ever go away?
Stefan Happ: I just came off a panel where we decided that--my prediction was that we'll probably get away from cash in 2,112 years. But in the meantime, there is a lot of opportunity to replace some of it.
Sarah Gill, Reporter: I mean, I think one of the interesting things about prepaid cards and prepaid generally is the different use cases people are finding for them. Apart from the ones that you have, are there kind of compelling applications of the technology that you see? Not necessarily the American Express.
Stefan Happ: You know, honestly, there is a lot of bells and whistles that the industry has developed. But I think there are three things, in my experience, that consumers are looking for, at least the consumers we're attracting today. And that is, "I want to get my money on the platform quickly. I want to make sure, every moment, how much I have left of my balance. And I want to access that immediately and instantaneously. And then I want to get the funds off quickly as well--instantaneously. So make it easier for me to put my money on, make it easier for me to track where I am, make it easier for me to take the money off."
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