When he was president of Wells Fargo & Co.’s consumer credit card division, Mike McCoy was responsible for about 5,000 workers in a global company with more than 280,000 employees. Today, as CEO of BillMyParents Inc., with its staff of just 20, his challenges are much different.

“I love every minute of it,” said McCoy, 52, who left his position at Wells Fargo in late 2011 to lead the San Diego-based company. Choosing to stay in Greater Des Moines rather than move to Southern California, he’s now drawing from talent in Central Iowa to staff an operations center in Clive.

Aimed squarely at the $200 billion-plus teen spending market, BillMyParents offers SmartSpend, a prepaid credit card that’s loaded by parents for use by their teen or young adult. It’s also loaded with features that encourage responsible spending, McCoy said. Under his leadership, BillMyParents is now seeking to ramp up its operations significantly.

In fact, the company recently hired celebrity Justin Bieber to represent the card.  In a filing with the Securities and Exchange Commission, BillMyParents disclosed that it will pay Justin Bieber Brands LLC a monthly royalty for each active card account, and has issued warrants to Bieber Brands allowing it to purchase 2 million shares of the company’s stock.

Adding Bieber is just the next step to an operation that’s already determined its product.

“What we’ve been able to do is take the chassis of a prepaid card and wrap a series of benefits and features around that card,” McCoy said. The result?

“Millions of teaching moments and coaching opportunities for families,” he said. Each time the card is used, both the teen and parent receive a text message summarizing the transaction. It also blocks purchases in places teens shouldn’t be, such as liquor stores, casinos and adult bookstores.

(Warning, kids: Mom gets a text about blocked transactions, too.)

A favorite feature for McCoy, a father of three teen boys who each carry the card, is an instant cash-loading feature for parents in case of out-of-town emergencies.

Because about 80 percent of teens’ purchases are made in cash, the opportunity to track purchases with the card is in itself a valuable teaching tool, McCoy noted.

“Cash doesn’t tell you where it’s been; it doesn’t tell you how it’s spent. The SmartSpend card does,” he said.

Over their heads

Leading Wells Fargo’s consumer credit card operation during the financial meltdown of 2008-09 was a “crucible experience,” said McCoy, who served in executive positions with Wells Fargo for more than 10 years. With high unemployment, a failing housing industry and the worst economy in memory at that time, “all of a sudden you see lots of customers who are starting to get behind and get in trouble,” he recalled. “I remember … saying, ‘We’ve got to start helping folks; we’ve got to figure out what’s going on.’

“What we learned at that time was that if people were behind in their payments with us, they were already way in over their heads with three or four other companies,” he said. “And generally speaking, while we were able to help lots of customers, there were lots of customers that were just too far in over their heads. I just thought, from a society and economy standpoint, there just has to be a better way.”

Then, about a year and a half ago, a BillMyParents board member telephoned McCoy with an offer to consider interviewing for the CEO position.

After learning about the company’s mission, “I said, ‘My goodness, this is it,’” McCoy said. “Instead of spending time trying to change ingrained bad spending habits, we can now focus on teaching, at an early age, good spending habits. We can have an impact on teens and young adults that will keep them from getting in over their heads.”

Iowa expertise

Basing the company’s operations center in Greater Des Moines makes a lot of sense from a recruiting standpoint, McCoy said. As a case in point, he recruited his vice president of operations, Tiffany Pesek, from West Des Moines-based social media savings company SmartyPig LLC.

“When you think about the financial services talent that’s available to us in the Greater Des Moines area, there’s a lot of great financial services and operation-level talent here,” he said. “It’s my intention to continue to tap into that and build more and more of our operations expertise here in the Des Moines area. So our team in Iowa will continue to grow over time,”

One of the things that McCoy likes best about the company is its history of entrepreneurial perseverance. After all, its founders launched the business as a gift card company. Rather than ditching the whole effort, they kept working on it until they hit on the teen-focused prepaid card concept.

McCoy said he’s never had so much fun.

“I have a passion around finding a great value proposition and great people and then maximizing that opportunity for customers and for the organization,” he said. “I love growing stuff.”

Not the Kardashians

The reputability of teen-focused debit cards took a hit two years ago when the Kardashian sisters of reality television fame pulled their Kardashian Kard off the market just a month after its debut. That move came following controversy spurred by Connecticut’s attorney general questioning the legality of the card’s “pernicious and predatory” fees. A 12-month Kardashian Kard cost $99.95 to own, including a card purchase fee of $9.95 and 12 monthly fees of $7.95, with those monthly fees continuing after the first year. Additional fees were charged for adding money, paying bills automatically and to speak to a company representative.

BillMyParents Inc.’s card fees are below the industry average for prepaid cards, the company claims. The SmartSpend card has no purchase fee and charges a monthly fee of $3.95, according to a cardholder agreement posted on the company’s website. The card charges 75 cents to load funds from a checking or savings account or $2.95 from a debit or credit card account. The minimum load amount is $10 and no more than $2,500 can be loaded onto the card.

According to a recent study on prepaid cards by the Federal Reserve Bank of Philadelphia, average monthly costs for prepaid cardholders ranged from $10.54 for cards issued by online card companies to $3.16 a month for cards issued by financial institutions. The study analyzed more than 280 million prepaid card transactions for more than 3 million cardholders of Meta Payment Systems, the prepaid card division of Sioux Falls, S.D.-based Meta Financial Group Inc. The study estimated that each active card generated annual net revenues of $92.95 for online issuers and $39.77 for financial institutions that issue them.

BillMyParents has used a combination of advertising and strategic relationships to increase enrollment for its services, CEO Mike McCoy said. For instance, the national organization Autism Speaks recently endorsed the card and its program for its members. “It’s a way to help them generate some revenue, as well as a way to help families with high-functioning autistic children to become more independent,” McCoy said.

“We’re also talking to a number of very notable celebrities, both in the ‘mom’ space as well as the teen space, that are very interested in our message and who have contacted us about helping us to promote our message,” he said.

In late November, a few weeks after McCoy’s Business Record interview, BillMyParents entered into a 14-month agreement with teen rock star Justin Bieber to promote its prepaid card. 

McCoy said his biggest challenge as CEO will be appropriately growing the company.

“When you have a message like ours, there are lots of organizations and individuals that want to be associated with that message,” he said. “We’ve got to remain true to our school. We’re not the flashy company; we’re a company that is focused on adding value every single day. So it’s making sure we make the right associations, the right growth opportunity decisions.”