NFC in the prepaid market: how Financial Institutions and MNOs benefit from active collaboration

Last updated: 30 September 2015

The prepaid cards market is one of the fastest growing non-cash payments market with most of the growth and adoption coming from the US.

Within this context, American Express’ Serve, a subsidiary of American Express, specializing in prepaid services, allows customers to enroll their service through Mobile Network Operators (MNOs). Together with two other major banks, American Express is a partner of ISIS – a joint venture between the three largest US MNOs – providing their customers with Mobile Wallet Services that they can use at participating merchants.

Serve’s recent announcement revealed a significant increase of their service enrollment through MNOs. Each time consumers sign up for ISIS, they can also subscribe to a Serve prepaid account, at any MNO’s store or online and get a co-branded digital prepaid card (Serve and ISIS) in their ISIS Mobile Wallet.

Active promotion, quick enrollment and ready-to use wallets can explain this success. For consumers, opening a prepaid account is easy and quick and they can pay with their Mobile Wallet right away. Moreover they receive promotional incentives once they’ve enrolled. In this regard, Isis recently claimed a significant increase in their wallet activation: 20,000 new wallet activations a day, during the last month.

With open loop prepaid programs of this kind, MNOs can offer mobile payment services to their customers, wherever a contactless Point of Sales terminal is available. What’s more, banks and financial institutions can also leverage MNO subscriber bases to acquire new customers.

We can anticipate similar mobile prepaid programs in the future, involving banks/financial institutions and processors partnering with MNOs. They can easily offer their customers ready-to-use mobile wallets for payments, while providing banking-grade security through secure elements such as SIMs.

What are your experiences with NFC and mobile payments? Let us know below.