Gene Retske, former editor of the Prepaid Press, said the prepaid phone card industry suffers from the lack of an association to provide oversight and best practices. In January 2012, industry leaders met in Washington to form the American PrePaid Phonecall Association. Retske serves as the APPPA's Executive Director and oversees its day-to-day operations.
"First there's got to be standards for membership in the association," Retske said. "But then we're looking at setting standards for the way individual products are packaged and priced and the disclosures."
Retske is worried that if the industry doesn't adopt standards around such issues as fee disclosures, the federal government will impose more regulations on the industry that will harm both businesses and consumers.
"The FTC and FCC have been cracking down on disclosures but, since there are no clear guidelines, it is difficult to determine what the rules are," Retske said. "This is a major effort that APPPA is going to be tackling."
One problem with standardizing fee disclosures is the nature of the industry, where rates for calling a myriad of countries run the gamut. "The FTC has said that it would like 'full disclosure' of all rates that will be charged," Retske said. "Last time I looked, there were over 15,000 different rates to different destinations around the world. That would be a small telephone book. Does the FTC really expect that a card provider would give this to a consumer?"
Retske argues that over-regulating the industry will drive up costs for calling card providers, resulting in a potential reduction in the number of products available in the marketplace as well as higher costs for consumers. Thus, Retske believes regulators are overlooking the needs end users have for long-distance calling cards. Said users are usually new immigrants to the United States.
"I can give you story after story after story of people who, to them, this is the way they keep in touch with family," Retske said. "They don't have cell phones. They don't have texting and Skype and Internet. This is the way they stay in touch. So anything it does to the industry that: a, reduces the availability of prepaid products; and b, significantly increases their costs, they're harming these people."
Retske said the prepaid calling card industry bifurcates into two sectors: domestic wireless and international long distance. Domestic wireless involves top-up networks, through which users reload prepaid phone minutes via cards and online. The international long distance sector is being increasingly dominated by "portals," according to Retske.
The chief characteristic of portals is their lack of a plastic card component. Portals are commonly located at the retail POS, where users pay retailers for receipts that contain call minute amounts and PIN numbers. Portals can also be self-service kiosks or websites. The biggest advantage of portals is their product flexibility.
Retske said, "You can go in and literally tell them look, 'My mother's Swedish, so I want to be able to call Sweden. My father's from Cuba; I want to be able to call Cuba.' And they can actually create on the fly a product that will give you advantageous rates to Cuba and Sweden."
It may come as a surprise to the mainstream, technologically savvy U.S. population that another world exists that may not only be unbanked, but also be what Retske calls "unphoned." Retske said such consumers buy phone minutes at portals, then head to phone operation centers to make long distance calls. Retske said such operations are common in immigrant heavy areas, such as Miami.
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