Academic journal article ABA Banking Journal

Prepaid Card Use Trends Upward

Academic journal article ABA Banking Journal

Prepaid Card Use Trends Upward

Article excerpt

Calendar-specific events influenced monthly usage of closed-loop prepaid cards, but the overall year-over-year trend, as shown in the table, was up across the board. The data comes from First Data Corp.'s quarterly SpendTrend report, which tracks year-over-year, same-merchant activations, redemptions, and reloads of merchant-branded cards in the United States, including spending, gift, incentive, and promotional cards. Closed-loop cards generally can only be used at the issuing merchant or affiliates.

Banks have increasingly taken note of the prepaid market now that rules implementing the Durbin Amendment have been issued, although banks' interest is more in open-loop cards, which SpendTrend does not track.

Earlier this year ABA's Business Solutions subsidiary launched a turnkey, bank-branded open-loop prepaid solution for ABA members. It is serviced by TransCard, with bank marketing materials provided by MasterCard.

To date, 27 banks have signed on to issue the cards under the program, says Christopher McClinton, vice-president for card solutions at ABA. They range from institutions of $60 million to $5 billion in assets.

The First Data report found that prepaid dollar volume growth slowed in April after the majority of holiday cards were redeemed during the first quarter. …

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