Finance & Strategy
with
Mark Tepper
1to1 Card
A
s president of prepaid program manager 1to1
Card, Mark Tepper hears his fair share of pitches.
But, when Better ATM Services CEO Todd
Nuttall approached him about managing a program
by which financial institutions could sell network
branded gift cards via their ATMs, his ears perked up.
A year and one successful Visa pilot later, Tepper is
optimistic that more banks across the country will take
advantage of the program he manages “behind the
scenes.” He talked with Paybefore about discovering
a new channel and knowing how to spot programs
with staying power.
Paybefore: What makes the
ATM a good channel for gift cards?
Mark Tepper: There are
multiple reasons, but the main
one is consumer convenience.
If you have kids in the car, you
don’t want to have to get out
of the car and stand in line.
Pragmatically speaking, do you
really want to make one more
stop to get a gift card when the
demands on your time already
have you stretched pretty thin?
This solution makes it very simple
to drive up to the ATM, purchase a
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gift card that can be used virtually
anywhere and get to that next
event that you’re already running
late for.
I’ve been in prepaid since ’98 or
’99, and this is the first product I
brought home to my wife and she
said, “I would buy that.” It’s truly all
about convenience. You’re stopping
by the ATM to get cash anyway and
this eliminates a stop for you.
Paybefore: Do you think ATM
distribution could work for other
prepaid card products?
MT: I think there’s significant
potential from a GPR perspective.
Consumers will be able to purchase
the card through the ATM and as
technology advances, we’ll be able
to execute the cardholder identification process (CIP) as well. For
example, we could use the ATM
authentication process to register
the card, scan an individual’s
driver’s license, or use the ATM
camera and apply facial recognition
technology to validate identity.
I also expect cardholders will be
able to deposit their payroll checks
and load those funds to the card.
Finance & Strategy
Q&A with Mark Tepper, 1to1
Certainly, for closed-loop applications, including retail gift or even
transit, ATM distribution could work
well too.
Paybefore: What was 1to1’s role
help them sell products issued by
other banks. In this case, the three
credit unions that are selling the
cards are not issuing the product;
our issuer is handling that. It is an
agent model.
in getting the pilot off the ground?
MT: First, it might help to give you
some background on what we do.
We are a program manager. We’re
not taking our own products to
market; we provide the back-end
for our partners. We’re able to
bring together the issuing bank
and the network, the processor,
card manufacturer, etc., and we
ensure compliance. Most of our
business is on the corporate side,
but we work with some banks to
What Are
For the pilot, 1to1 has built out
the technology for Better ATM
Services, providing consumers the
ability to load and activate the card
while at the ATM, with either a fixed
amount or variable values. We also
brought the issuer to the table
along with all the back-end card
processing. Better ATM Services
aligned their technology with the
credit unions and the ATM services
provider and led the efforts with
MT&L (a major card manufacturer)
Consumers Saying?
In January 2011, Visa announced it had been running a pilot with three
Arizona credit unions—Credit Union West, MariSol Federal Credit Union and
Pinal County Federal Credit Union—selling Visa Gift cards at select walk-up
and drive-through ATMs. Using patented technology from Better ATM
Services and the program management services of 1to1 Card, Visa Gift
cards, which are made of a durable yet thinner material, are able to easily
pass through the cash mechanisms of ATMs. Visa has been conducting
focus groups throughout the pilot, and the consumer response has been
very positive.
The No. 1 word that comes up in every interview or survey examining
consumer acceptance is “convenience,” according to Todd Nuttall,
CEO of Better ATM Services. “People already know about prepaid cards
and purchase them for many reasons,” he says. “They also know and trust
their ATMs and consider the ATM to be a normal part of their regular
errands. Combining the two has generated consistent feedback that it
‘makes sense’ and that consumers will likely buy more prepaid cards
because of the convenience of the ATM.”
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to produce the modified cards
and gain approval of the new
form factor through Visa.
Better ATM Services also led
the marketing efforts.
Paybefore: The pilot was in
Arizona. Is there going to be a
national rollout?
MT: The pilot has gone very
well and we are expecting to
launch in many more states this
year. I think our initiative right
now is to show the proof in
the pudding. [See “What Are
Consumers Saying?” below.]
Paybefore: What are you
hearing from banks?
V o l u m e 5 • F a l l 2 0 12
MT: The banks we’ve talked to
are excited about it. They want
to sell gift cards, but the branch
distribution channel is clunky and
labor intensive. Oftentimes, gift
cards in branches are locked in the
safe and the teller has to retrieve
them and activate them, which
means the labor involved in issuing
one card is pretty substantial.
ATM distribution takes out all that
labor. The cards have no value in
the ATM until a consumer initiates
a purchase. Plus, fewer people are
walking into bank branches these
days, preferring to use ATMs for
their basic banking needs. I think
banks see ATM distribution of gift
cards as a potential revenue
generator and believe they will
sell considerably more cards out
of an ATM than from someone
walking up to the teller.
Paybefore: As a program
manager, how do you make the
right bets?
MT: I try to understand whether
my potential clients have the ability
to get a product to market and
attract the target audience. I tell
more people no than yes. Frequently, it’s because they don’t
have the financing they need.
It isn’t as easy as creating a card
product and people going to buy it.
You have to really look at why the
concept is good (or not). When
you appreciate that starting new
endeavors in the payments industry
is nothing short of a walk through
a field of land mines, you have to
also look at critical elements for
success. Many startups under-
estimate the time to launch and
the work involved in selling their
product into the market. Leadership and tenacity will contribute
more to victory than almost any
other factor. I believe 1to1 and
Better ATM Services have these
important characteristics.
I’ve been in
prepaid since
’98 or ’99,
and this is
the first product
I brought home
to my wife
and she said,
‘I would
buy that.’
—Mark Tepper,
1to1 Card
Paybefore: What are you
working on now?
MT: We’re working on products
that are restricted access or limited
use (i.e., they run on an open
network, but are restricted to
specific merchants). We’re also
working with marketing promotional
companies to create unique programming and packaging.
Other clients have specific markets on which they are focused.
For example, we’re working with
health care and insurance groups.
These partners have multiple years
of experience in their respective
spaces and understand how to
position and market to their
specific industries. For these
partners, programs are focused
on giving the cardholder payment
immediately and eliminating cutting
checks and mailing. The obvious
benefits include the ability to move
funds much more quickly and
efficiently, while being “greener.”
In every case, we work with our
clients in developing a comprehensive approach.
Paybefore: You’ve been in
prepaid a long time. What excites
you about the future?
MT: There is a tremendous
amount of opportunity for
growth. I’m excited about the
things we’re looking at doing.
We have so many different types
of companies calling us up to talk
about programs that we’re in the
enviable position of not having
to go out to look for business.
The fun for me is to work
through and understand
what the project is—does it
have a place in the market—
and then making sure we’re
implementing best practices.
It’s not a matter of, “Here’s a
product in the box, go sell it.”
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