Visa Inc. (V) and Chexar Networks announced today the launch of a network platform to digitize traditional banking services for consumers.
Initially, the platform will enable millions of Visa prepaid users to deposit paper checks to their reloadable Visa prepaid card using their mobile device, by simply snapping a photo of a paper check. Powered by Chexar's technology, including its remote deposit capture platform, the service provides Visa cardholders with immediate access to funds on their Visa prepaid card, enhancing convenience and security and reducing costs for consumers. Later this year, new and existing prepaid cardholders with RushCard, AccountNow and Plastyc, as well as select FSV Payment Systems cardholders, will be able to enroll their Visa prepaid card, and immediately begin making remote deposits.
The platform will support check deposits to Visa cards, funds transfers between Direct Deposit Accounts (DDAs) and payment cards, person-to-person payments and bill payment services whether in-person, online, on a mobile device or at an ATM. Transactions originate and terminate with a financial institution partner and consumer funds sit within an FDIC-insured account. As consumers move between devices and deposit channels, their prepaid account now moves seamlessly with them and works reliably from any device. Chexar predicts that 11 percent (770 million) of consumer checks will be deposited using a mobile device by 2016.
"We see this network utility as more than a technology, it's an evolution in the way people deposit and move funds and our goal is to make that process frictionless and immediate for consumers," said Drew W. Edwards, Chexar founder and CEO. "It's no secret that reloadable prepaid cards are growing in popularity, and we are happy to provide consumers with a secure and convenient way to deposit funds and have immediate access to their money. Our agreement with Visa represents an inflection point for the prepaid industry, and will only grow as mobile devices become more ubiquitous."
According to Visa research, nearly 35 million consumers receive wages and government disbursements via paper check and 34 percent of the study's participants revealed that direct deposit was not an option available through their employer. Additionally, a study of payment trends by McKinsey & Company estimated $1.18 trillion in person-to-person payments were made by check in 2009. According to the Federal Deposit Insurance Corporation, more than 28 percent of U.S. households in 2011 weren't connected to the traditional banking system. As an alternative, many consumers have turned to prepaid. In 2011, prepaid card use rose by 18 percent according to Javelin Strategy and Research.
"Consumers are choosing reloadable prepaid cards at an increasing rate, and for many of the same reasons that consumers embrace other electronic payment options — security, convenience and reliability," said Hyung Choi, head of U.S. Prepaid, Visa Inc. "Mobile technology and other payment innovations are enabling us to enhance Visa's prepaid experience and bring all the conveniences of traditional banking options to consumers who choose to use prepaid."
Reloadable Visa prepaid cards offer a secure, convenient and cost-effective alternative to cash and checks, providing consumers a better way to make everyday purchases, pay bills and now, make check deposits. As with all Visa prepaid products, users can make purchases everywhere that Visa debit cards are accepted — in stores, online or over the phone.