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BET Networks is entering the exploding business of prepaid cards, partnering with an industry leader in hopes of reaching millions of black Americans who don't use banks.

BET, the biggest brand name in black media, is offering the card with NetSpend, one of the biggest prepaid card companies. NetSpend hopes the endorsement will help it convert BET viewers into fee-paying customers.

Blacks are overrepresented among what the financial industry calls the unbanked and underbanked, people who don't have bank accounts or who use high-cost services like check-cashing and payday loans.

Prepaid cards are like debit cards but aren't attached to a checking account and sometimes lack the consumer protections offered by debit and credit cards. They are the fastest-growing electronic payment method, according to a 2010 study by the Federal Reserve.

BET began taking phone and online orders this month for the card, called the Control Prepaid MasterCard. The companies are testing the market before what they expect will be a flood of interest, says Dan Henry, CEO of NetSpend.

"We look for true partners, like BET, who recognize this need in this country: to provide financial services for low-income consumers," he says. Those consumers often resort to costly options like storefront check-cashers. For some, prepaid cards are a lower-cost alternative.

To the financial industry, the unbanked are a mostly untapped market. American Express and other companies are marketing prepaid cards and other products designed for people who can't get bank accounts or don't trust banks.

Other potential customers live paycheck to paycheck and prefer the safety of a card that will not charge unexpected fees for overspending or bounced checks.

About 22 percent of black households don't have bank accounts, compared with 3 percent for whites, according to a 2009 study by the Federal Deposit Insurance Corp. The study found that more than half of black households either don't have bank accounts or sometimes use higher-cost financial services.

"There are so many people still using check-cashing services, so many people paying exorbitant bank fees, so many people who are managing their financial affairs solely on a cash basis," said Scott Mills, BET's president and chief operating officer.

He says the company chose its partner carefully, even though other prepaid cards have been hawked on BET-owned channels for a decade. He says BET executives were impressed with NetSpend's focus on reaching underbanked Americans.

The goal of companies like NetSpend and its chief rival, Green Dot Corp., is to convince people without bank accounts to sign up for cards, then keep those people using them _ and keep incurring monthly fees. One way NetSpend retains customers is by cutting fees for people who have their paychecks deposited directly.

Some companies also use the cards to convert underbanked consumers into bank clients. The Control card offers high-yield savings accounts to people who have $500 or more deposited directly each month. Big banks try to "graduate" card users into regular checking accounts.

The companies rake in millions from fees paid by customers, by stores when people swipe the cards, and from a small amount of interest paid on the cash deposited by cardholders.

Executives from BET and NetSpend would not provide details on how the two companies will divide the profits from the Control card. NetSpend had 2.1 million active cards at the end of 2011, with $11 billion loaded onto the cards last year.

Black celebrities have already endorsed cards that compete for a slice of the market. They include hip-hop mogul Russell Simmons' RushCard, radio host Tom Joyner's Reach Card and rapper Lil Wayne's Young Money Card.

Control card users pay $7.95 per month, $2.50 per ATM withdrawal, $1 for overspending and 50 cents to check the account balance via telephone or ATM. There's also an unspecified fee for reloading the card with cash or a check rather than direct deposit.

Those who have $500 per month deposited directly qualify for a lower monthly fee of $5, the high-yield checking account and a $10 "purchase cushion" that allows users to overdraw their accounts without penalty.

Consumer groups have raised alarms about hefty fees and aggressive marketing by some prepaid card companies. In a report released Thursday, Consumers Union said weak regulation has allowed prepaid cards to mushroom into "a second-tier and much less desirable banking system" for many consumers.

It called on the Consumer Financial Protection Bureau, the government's new watchdog agency, to require clearer fee disclosures and make prepaid providers follow the same rules that govern debit and credit cards.

CFPB officials have signaled that the bureau is taking a close look at the prepaid card market. Its review could include their fee structures, marketing materials and disclosures.

Yet clearer fee disclosures, and even lower fees, are unlikely to dampen consumers' hunger for the cards, Henry, the NetSpend CEO, suggested last year during a conference call with analysts.

"We don't find a lot of price sensitivity to this product," Henry said.

That's because many people prefer the upfront costs of prepaid cards to the unexpected fees banks sometimes charge, says Anisha Sekar, vice president of cards for NerdWallet, a website that researches cards and helps people compare offers.

"They're more willing to pay the cost of a card to get that mental security," she says.

Henry says marketing partnerships like the one with BET will help drive prepaid-card growth, especially as more employers and governments eliminate paper checks and banks offer fewer free checking accounts.

"I see all these new partners we're getting as a way we're getting more boats on the water or being able to reach and attract these consumers as they are driven into the electronic payments economy," he told analysts last year.

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Follow Daniel Wagner at http://www.twitter.com/wagnerreports.

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