A month ago BB&T launched a prepaid account, a GPR program targeting the underbanked.  It sports a $10 monthly fee (half that if you deposit $1k/mo) and free cash deposits from any branch or via the Visa ReadyLink Network.  Several banks have approached Green Dot about managing GPR programs for them.  A top-5 bank is said to be looking for a program as well.  Earlier this week, quite a few banks were trolling the floors of IRR’s Prepaid Expo in Armpit, err Orlando, FL.

Banks can have several roles with prepaid, of course.  They could simply “issue” the card, meaning they’re just the bank of record behind any card accounts, regardless of where a person gets the card.  The bank could also distribute the card – usually this is in the form of a payroll program.  Banks like US Bank and Citi will go to their commercial customers and offer it to them for employees who don’t use direct deposit or to disburse benefits and rewards and such.

Finally, banks could also distribute a prepaid account directly to its retail customers, as what is often derisively called a “turndown” option:  Customer walks into bank and requests a checking account, or credit card.  Bank does some mumbo jumbo and says no for some reason (the turn-down).  My friends at CFSI have long argued that this is a great time to offer a prepaid account instead.  Until just a month ago or so, banks haven’t seen the wisdom of this, “why offer someone a turndown product?” (aka “why serve the underbanked?”)

Today is a much different world than 3 years ago, and with customers hemorrhaging from banks, not to mention much greater acceptance and awareness of prepaid accounts, we’re hearing a different tune.  It goes something like this, “Congratulations Ms. Soandso, you qualify for this advanced new checkless checking account.”  The lower cost and feature rich open loop prepaid account behind it is a way the bank can say YES to virtually anyone who walks into the lobby (or applies for a credit card).  They can migrate customers to a normal checking account or credit card later on, with more known about the user, and the world is a slightly happier place.