What to Look for (and Avoid) in a Bank

Banks and Rewards

First things first: Most banks don’t offer custom prepaid and reloadable debit cards. And if they do, they typically don’t offer them for the purposes of offering an incentive program. Sure, there are quite a few options such as American Express gift cards. And if you’re a very small company that isn’t planning to set up a web portal and doesn’t have the resources to commit to a long-term incentive program, simply ordering some Amex gift cards could be an option.

But as we’ve stated earlier in this article, it’s important to go all-in with an incentive program; it’s not something you should half-commit to. And we’ll discuss shortly, we believe web portals to be wholly necessary if you want to maximize the potential of your program. Plus, if you think an incentive program isn’t in your budget, consider its relative effectiveness over and above other traditional approaches to marketing and sales. In other words, you’ll want to find a bank that can actually partner with you in providing prepaid and/or reloadable debit cards. A handful of Amex gift cards isn’t going to cut it.

Surprisingly, the vast majority of banks both large and small have completely ignored this space. This isn’t a bad thing, but it does mean that you shouldn’t waste your time calling around to your own financial institutions and existing banking partners to see whether they offer a prepaid card program. Chances are good that they won’t. Instead, you’ll need to search specifically for a bank that offers these sorts of services, either online or through your existing network.

It’s also worth pointing out that among the banks that will act as the processor or bank of record for these sorts of transactions, many aren’t going to want to work directly with you. This is also completely fine, and totally normal. Remember, banks are good at numbers, but they’re often not so great when it comes to sales and marketing. It’s pretty standard for you to need a go-between in the form of an incentive provider

What to Look For in a Bank

All of that begs the question, though, of what to look for when searching for a new bank. We’re of the strong opinion that the most important thing to look for in a bank is experience and strong references. Find out exactly how long a bank has been offering these services, how long it’s been around, and how many clients it’s worked with. Then, take the time to actually call these clients and ask them about their experiences. Don’t just take the bank at its word.

Remember, too, that banks change names frequently with mergers and acquisitions rampant in the banking world. So, the fact that a bank recently underwent a rebranding doesn’t necessarily mean there’s something potentially suspect about that bank. It’s quite common for both people and processes at your preferred banking partner to remain constant, even while its name may change on a regular basis.

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What to Avoid in a Bank: A Cautionary Tale

To some extent, the best way to know what to look for in a bank is by understanding what to avoid.

Over the years, we’ve run across our fair share of duplicitous, unscrupulous “banks.” Unfortunately, there are a lot of scams out there — and also a lot of banks that are simply poorly managed and about to bite the dust, although they give no outward indications of this.

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In our many experiences working with a wide variety of banks, we’ve encountered three situations in particular that caused great alarm for us and our partners. We’re opting to share these stories with you here as a kind of cautionary tale. We’ve had to learn from our mistakes the hard way, but we hope that you can avoid making them in the first place.

Here are three scenarios that we’ve encountered. The first two caused us quite a bit of trouble, and the third is representative of us finally learning our lesson when it comes to dealing with a new banking partner.

1) The Bait and Switch

Early on in our company’s history, we worked with a small banking partner who claimed that they could produce a very small batch of custom, prepaid debit cards. Larger banks were unwilling to fulfill such a relatively small order, so we opted to go with this smaller bank.

At the 11th hour, we received a call informing us that the cards could no longer be custom. Instead, we’d have to use generic, unbranded cards. We had already launched the program, so it was too late to pull out. We begrudgingly accepted the generic cards, assuming that things would at least go smoothly from there.

Unfortunately, the situation deteriorated even further. After launching the program and distributing the generic cards, we discovered that our issuing partner had entered bankruptcy protection, meaning all the funds available on the cards would be removed if they weren’t used within a specific period of time. This was all contrary to our original agreement.

With enough legal pressure, we were able to arrive at a settlement with the bank in question that effectively limited the amount we ultimately lost. We were able to achieve damage control here, but the situation was nearly catastrophic.

The lesson here? If something sounds too good to be true, it probably is.

2) The Lack of References

Years ago, a prospective client reached out to us about a potential partnership. They were interested in a General Purpose Reloadable (GPR) card program, though, which was something we didn’t offer at the time.

At about this same time, we met a banking partner through our network who claimed to offer a GPR program. We were a little uneasy, as this person had no website and no official internet presence. But we opted to make the introduction anyway as a favor to the prospective client. We figured that we had met them through our network, and it was ultimately up to the prospect who had originally contacted us to vet them before agreeing to work with them.

Long story short, things didn’t go well. The company in question ended up defrauding two separate firms — the one which had originally contacted us, plus another firm — out of approximately $25,000 each. We and the firms in question all chose to look past the complete lack of experience, references, and web presence. We weren’t directly responsible for the outcome, but we had to acknowledge that we’d been the ones to make the introduction. Our reputation was somewhat tarnished, and it took us time to recover emotionally from the fraud.

The lesson here? Always check references. If a bank gives you even the slightest sense that something’s off, walk away from the deal.

3) The Disappearing Bank

When you first start out in many industries, particularly in the business-to-business (B2B) space, it’s common to spend some time doing cold calls and other forms of outreach. This is a necessary evil when you’re first trying to get off the ground. But if you’re good at what you do, you shouldn’t have to keep this up for long. Before you know it, your reputation leads to a steady stream of incoming business. 

In other words, B2B companies that are good at what they do shouldn’t be spending a ton of time on cold calls to new prospects. Some time ago, after the two experiences mentioned above, a new bank reached out to us and requested a meeting, claiming to offer prepaid and reloadable debit card services that would mesh well with what many of our clients needed.

Rather than jumping at the offer for a meeting, we instinctively asked for references. And guess what? We never received them. When we attempted to check back sometime later, the company had fallen off the face of the earth. Obviously, they weren’t up to the task. In learning from our past mistakes, we were able to avoid a repeat scenario with an unstable and/or fraudulent bank.

We don’t mean to paint a wholly negative picture by mentioning these unpleasant experiences. We’ve found a number of banking partners that are reputable, financially strong, and great at what they do. If you look hard enough, you’ll be able to do the same.

You’ve probably noticed that pricing hasn’t come up in this article at all. We’ll discuss pricing a little later, but for now, it’s critical to separate pricing from financial stability. They’re mutually exclusive, and while you can absolutely find good value AND a great reputation in the same banking partner, it’s important to not become blinded by rock-bottom prices.

There are plenty of solid banking partners out there, but it pays to be picky in your search. Don’t jump at the first option you find. Do your homework, call their references, and choose a bank that has a proven track record.

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