By Beth Bailey
Prepaid cards provide governments, consumers and businesses with security, efficiency and flexibility by making digital payments available via a piece of plastic in your wallet. Xerox disburses more funds than any other firm in the industry; processing over $86 billion in pre-paid amounts annually across a variety of programs. At the helm of this work is Mike Nash, our prepaid card visionary and senior vice president and managing director of Payment Services.
Mike’s worked with global names in the “card business” including American Express and Visa, as well as start-ups focusing on digital cash and smart cards. He originally joined Xerox as part of our transportation group, focusing his energy on fare collection, until he shifted to payment services.
“For a company that began by giving people a better way to produce documents, my team’s focus is actually the opposite. Cards replace paper by doing away with the need to cut checks and mail out payments,” Mike said.
Xerox does this type of work with the U.S. Social Security Administration and other federal programs. It allows recipients who are unbanked (have no bank relationship) or underbanked (usually have only a savings account) to make purchases at the point of sale or online, get cash from ATMs or to pay bills via autopayment.
“We have a unique relationship to many of our end users, because they rely on these cards to live. We understand the responsibility this brings,” Mike explains. “Just like Xerox as a whole, we focus on improving the flow of work and the processes that support it.”
On the nights our federal clients disburse benefits, Xerox often processes one billion dollars in an hour—over 600 transactions every second. Behind the scenes, this requires error-free activity in all areas, including processing, technology, compliance, security, fraud protection and customer service.
“It’s an incredible amount of work to make sure nobody is ever inconvenienced using our cards,” said Mike.
The shift to a global standard for smart payment cards—the Europay, MasterCard and Visa (EMV) — is well underway. These cards are equipped with computer chips and the technology that is needed to authenticate chip-card transactions. Every time an EMV card is used for payment, the card chip creates a unique transaction code that cannot be used again. This is very effective in preventing counterfeit use at the point of sale.
But, even this is a step along the way, when you consider how Mike sees the prepaid future.
“Looking ahead, I expect your physical wallet to move to your smartphone,” he said. The trend is certainly moving toward making your phone a multi-functional device with a number of applications. This characteristic creates demand for phones across all demographics and income-levels.
“On a smartphone, there is opportunity for the provider to create a branded experience for their customers because each app has its own user interface,” Mike added. “Today’s card, which acts as a secure identifier, has no graphical user interface or even a static one. An app, however, provides an opportunity to present information in the way the provider’s brand dictates.
“Users will connect to check balances, make payments, load checks, review transactions and more—right on their device,” he added. “Channels and features will continue to open up, moving from today’s Apple Pay and Amazon Wallet to even more enabled platforms for providers and users.”
Safeguarding our digital identities
Security is a primary area of focus within the industry. Currently, EMV chip cards reduce point-of-sale fraud based on the use of counterfeit cards. However, EMV does not prevent on-line fraud unless issuers take additional measures such as 3DSecure, known by branded names such as “Verified by Visa” and “MasterCard SecureCode.” 3DSecure is designed to be an additional security layer for online credit and debit card transactions.
Another type of payment security is tokenization. It replaces sensitive payment data, such as personal account numbers, with a unique identifier or token. Because the use of these tokens is restricted to a particular mobile phone, merchant or other domain, they cannot be used to conduct counterfeit fraud. Similar to 3DSecure, most tokenized transactions also generate a one-time use cryptogram that further validates the authenticity of the transaction.
With all of these new approaches, however, Mike does not believe that passwords or fingerprint readers will fade anytime soon.
“The goal of security is to create a process that is all but guaranteed to prove you made the transaction” he said. “As we move to smartphone-based disbursements, three factor identification is possible. This means you will need to have something (the phone), know something (your password) and be something (your fingerprint) to make the transaction. This dramatically reduces the chance of someone else using your account. Apple Pay, for instance, does a great job of making this convenient.”
For Xerox, the future of our prepaid offerings focuses on the user and simplifying the experience. Consumers want their prepaid card experience to be seamless, responsive and transparent on all levels.
“By bringing our expertise in customer care and data analytics to the table,” Mike shared, “we have unique insight into the best ways to merge these areas while creating industry-leading best practices.”
Prepaid cards are yet another way we improve work processes that have a direct, and positive, impact on the lives of millions of people.