Magazine article American Banker

As Prepaid Load Forecasts Rise, the Add-Ons Add Up

Magazine article American Banker

As Prepaid Load Forecasts Rise, the Add-Ons Add Up

Article excerpt

Byline: Andrew Johnson

The utility of prepaid cards is growing as marketers develop features that can strengthen their customer relationships.

Although not a new trend, coupling ancillary features such as direct deposit, online billpayment and insurance with a prepaid card has become more common as card issuers and distributors stake out their turf in a market experts say is poised for major expansion.

Internationally, prepaid cards represent a $762.2 billion load opportunity in the coming years based on growth projections in 30 countries outside the United States, according to a report released last week byMercator Advisory Group Inc.

The Maynard, Mass., firm measured the growth opportunity for the load value on prepaid cards based on demographic and economic factors in different countries, using actual U.S. prepaid card load figures from 2008 as a benchmark. The report covers government, store gift, payroll, general-purpose reloadable, incentive and campus prepaid cards.

The projection is more than triple the $209.1 billion that was actually loaded on to cards in those six categories in the United States in 2008, the report said.

"It comes down to who is in a position to capture the customer first," Tim Sloane, the director of Mercator's prepaid advisory service, said in an interview Monday. "Where is your product being presented to the consumer and in what venue is it being presented? ... Today being able to find multiple avenues to that consumer that hit them at the right time with the right value proposition, which more and more includes not just a prepaid product but includes some social aspect as well, is the name of the game in getting additional market share."

Adding features on top of a prepaid card's core payments function can help reduce churn, a constant challenge for providers of such cards, Sloane said.

For example, on Monday the prepaid card distributorPlastycInc. …

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