The Western Union Company (NYSE: WU), a leader in the money transfer segment of global payments, today reported financial results for the third quarter. Western Union issues several prepaid debit cards (including their Gold Card Rewards card and the MoneyWise prepaid card). In their 3d quarter earnings call, Western Union discussed their view of the prepaid market, and how they are going to approach it.
The following quotes are from SeekingAlpha‘s transcript of the conference call.
Christina Gold, President and CEO of Western Union stated:
In prepaid, our testing over the course of the past few months has provided valuable information for us to expand our offerings. We currently have two reloadable prepaid programs in the market. First, our MoneyWise Visa prepaid card provides a strong value proposition to consumers, particularly the underbanked. This card enables consumers to add money conveniently, including the ability to load a Western Union money transfer directly onto the card.
Our new prepaid Visa Gold Card has all of the same great benefits of the MoneyWise program and it integrates our industry-leading Gold Card Rewards. We continue to pilot both programs and are expanding them through a variety of marketing efforts, including direct mail, online email, and in retail locations.
Later, in the Q&A following the presentation, Ms. Gold stated:
As you look at the market for prepaids it’s in the billions of dollars. It’s a very large category and what we’re trying to determine exactly is what space are we playing in and we really are trying to look at our customers and see a couple of things.
Firstly, we are looking prepaid as an alternative in terms of using it for home delivery and direct to consumers. And that’s one of the tests that we’re doing with the MoneyWise card, and we’re seeing good uptake on that and good performance there.
And then the other piece of it is how do we expand our Gold program, where we have about 8.0 million consumers in the U.S. on the Gold card, and can we move them over to the prepaid, and we’re seeing uptake on that as well.
So I would say that as we come into 2010 we will be in a better position to clarify exactly the size that we are looking at because we are testing a lot of alternatives. But preliminary, we are very pleased with what we see. We also see good metrics in terms of profitability and in terms of return for the company, so we’re not giving ourselves a difficulty in terms of margin.
So I think all of the things are lining up extremely well and as we bring our plans to you for 2010 we can give you a little more detail on that.
And finally, in response to this question from Robert Napoli – Piper Jaffray: “On the prepaid business, are you anticipating rolling like a cash-reloadable card out into the retail market and compete with other brands out there like a GreenDot or a NetSpend or a BlackHawk?”, Christina Gold answered:
We’re looking at all kinds of alternatives in terms of the prepaid and I think one of the things right now is we’re trying to maximize on the 8.0 million Gold Card consumers that are in our network to see what the advantages of us being able to move them onto a prepaid and get the positive in terms of the positive margin dynamics from that group. But we will look at all different opportunities as we expand our prepaid offering.
Clearly, Western Union is interested in the prepaid debit market. They are well-positioned, with 8 million current cardholders. Let’s see how they expand!