Better ATM Services has said that its ATM-dispensed prepaid card program is ready to roll out nationwide under the Visa brand name.
The announcement, made on the first day of this week's ATM, Debit and Prepaid Forum in Phoenix, follows several months of successful pilot testing conducted by Mesa, Ariz.-based Better ATM Services and Visa in cooperation with a number of Arizona FIs.
Better ATM Services CEO Todd Nuttall said that approval of the project for nationwide rollout "is actually an enormous step to get that ratification that this new form factor, this new form of card, is actually widely available to card issuers throughout the United States, and we'll keep expanding from there."
The pilot program
With just a few adjustments to software and hardware configurations, pilot FIs were able to offer Visa prepaid cards through a walk-up or drive-through ATM. The cards are made from a material thin enough to be dispensed through a standard banknote cassette, but durable enough to withstand frequent use by the cardholder. Before their introduction, the cards were subjected to rigorous testing to make sure they met Visa standards.
Initially, the cards were dispensed in fixed values. But during the pilot, Better ATM Services introduced additional — and also relatively simple — adjustments that would allow consumers to designate a dollar amount to be transferred from their bank account onto the card.
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"With the variable, there's a little more that you have to change in the program, because obviously, it's user selectable — but it's still easy," Nuttall said. "Right here in Phoenix you can go up to some machines and choose the amount you want to load and that creates the card right there, and when you walk away, you can immediately use the card."
This variable value feature opens new opportunities for card use, Nuttall said. Theoretically, a customer could now walk up to an ATM and deposit a check directly onto the card, using the ATM's scanner feature.
Not only does this provide the ability for a consumer to transfer value immediately from the limited check instrument to the highly flexible instrument of a payment card, but it also resolves the problem of how to allow ATM users to cash checks in odd amounts that an ATM cannot dispense, Nuttall said.
"One of the problems with an ATM is that it can't get coinage out. So if somebody cashes a check for $72.15, an ATM cannot do that. It can only deposit it. With a card, it can be $72.15. And so it's a natural extension," Nuttall said.
He said that Better ATM Services currently is working with institutions to develop this use case, but that nondisclosure agreements prevented him from going into further detail about the proceedings.
Nuttall said that direct deposit to the card was another concept the company was pursuing with prospective partners.
A feature of the Better ATM program that some FIs might find particularly attractive is the ability to cobrand the Visa card with their own identity. This could serve banks in very useful ways, Nuttall said.
First, it would give banks that lack the wherewithal to develop, program and implement their own prepaid line a far less expensive and far more quickly implemented card option.
Second, it would help banks with an existing prepaid program to instantly and cost- effectively extend their program's reach. "Many banks haven't been able to be successful beyond the counter because they can't compete with … convenience stores or [big] box stores," Nuttall said. "Now they can actually leapfrog, because the ATM is even more convenient than a convenience store."
The prepaid market is estimated to be $549.7 billion in 2012. According to Mercator Advisory Group, by 2013, consumers will load $117 billion onto prepaid cards, which would mark a 200 percent increase in use over just three years.
For more on this topic, visit the multifunction ATMs research center.