Here's the question: When you've already made a success of an open-loop prepaid that can be loaded with any amount of money and dispensed right out of an ATM cash cassette, why launch a closed-loop gift card?
Here's one answer: An open-loop Visa prepaid is what your company gives you as a generic holiday gesture; the new myGift card from Better ATM Services is what your brother gives you for Christmas because he knows you're jonesing for new ice-fishing tackle from Cabela's.
Here's another: It's not exactly a closed loop. As the myGift tagline says, "One card, many choices." The prepaid card can be used with not just one merchant, but many.
And here's one more: myGift merchants pack serious brand power. In addition to Cabela's, a few of the national merchants who accept the card include Macy's, Lowe's, Outback Steakhouse and Bonefish Grill.
And here's a final one for good measure: Research by Better ATM Services found that more than 80 percent of all ATM users are also prepaid card purchasers. So it would seem that there's plenty of room for more than one prepaid solution in the ATM channel.
The first-ever ATM-dispensed, multi-merchant prepaid gift card
With all of these potentialities in mind, Fenton, Mo.-based InteliSpend Prepaid Solutions and Mesa-Ariz.-based Better ATM Services decided to leverage their respective specialties to create a first: a multi-merchant gift card issued under the Discover brand and dispensed right from the ATM.
InteliSpend is an issuer and reseller of prepaid products for both Discover and American Express, and a program manager for MasterCard and Visa. The company provides businesses with prepaid solutions that include stored-value cards, online reward management technology, and program management.
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"They have arrangements with a few hundred of the major retailers around the nation — even around the world," said Better ATM Services CEO, Todd L. Nuttall. "And so they're the ones that already have these co-branding relationships for other business-to-business type things. But they've never been able to put it in a card coming out of an ATM."
Nuttall said it made sense to issue myGift under the Discover brand because the card company already had experience with selective merchant relationships. "They've really been at the forefront of that in the business-to-business world — but now going into the consumer convenience world," he said.
Among themselves, InteliSpend, Discover and Better ATM Services possessed the expertise and wherewithal to cultivate a list of participating merchants, implement and manage the back-end systems (even allowing card funds to be spent over time at different participating merchants) and deliver the card in a format that could be dispensed from a standard ATM banknote cassette.
A proven ATM-dispensed format
The physical card itself uses the same format as the Better ATM Services Visa prepaid, with three fold-and-snap sections: The first contains the gift card itself; the second identifies participating brands by logo; and the third provides card-use information and a web address where card recipients can check for additional brands.
Working a multi-merchant arrangement through InteliSpend allowed Better ATM Services to work around the limited cassette capacity of the ATM, while still offering a card with high perceived value to a broad audience. And Nuttall expects the audience appeal to continue to increase as myGift expands its merchant list. "We've already got some that are in the works," he said.
As a perk to participating brands myGift accepts just one provider per product or service category. In addition to attracting merchants, this allows (or challenges, depending on how you look at it) Better ATM Services to create and maintain a roster of brands that deliver maximum consumer cachet.
And that roster must be carefully balanced, Nuttall said. The list of merchants must be large enough to create broad appeal for the card, but small enough to maintain the personalized feel. "We've tried to do that [so] it's close enough to that personal gift without saying, 'Well, this is just open like a Visa card,'" he said.
A holiday gift solution with a feel-good effect
For its initial launch, the myGift card is being offered through Banner Federal Credit Union ATMs, which are supplied and operated by Express Teller Services. Eleven of the Mesa-based FI's terminals are located within facilities operated by Banner Health, one of the nation's largest non-profit healthcare providers.
According to Banner Federal Credit Union president and CEO Roger Swanson, the decision to team with Better ATM Systems on the myGift prepaid card pilot was practically a no-brainer.
"People are busy and all of the sudden we've got the opportunity to provide them a secure card in a convenient manner," said Swanson. "It drops out of the cash tray of the ATM that they were already using for regular ATM services. It just seemed like a win. And then on top of it, we hit the holiday season. What easier way is there to get your holiday shopping [done] while you're getting your cash?"
The credit union placed a 2-foot topper on its ATMs to promote the card and once ATM users are aware of the product, the purchase process is the very model of ease, Swanson said. "When you launch the ATM machine by inserting your card, you [get] a screen option for cash or gift card," he said. "So it's very straightforward — it's simple."
For the launch of its myGift card program, the credit union took the opportunity to add philanthropy to customer service. From now through March 2013, the FI will donate 50 cents to the Banner Health Foundation for every myGift card sold through its ATMs.
Pat Elder, director of corporate and foundation relations at Banner Health, said the FCU's "give-back" campaign was a great opportunity to create awareness for the health system's non-profit message. "Our employees and people visiting our facilities see the kiosk there ... and it's probably something they didn't expect and a very pleasant thing that we hope they'll partake in," she said. "They can purchase some gift cards and do good at the same time."
For more on this topic, visit the multi-function ATM research center.