Wednesday, January 25, 2012

Will credit card trends of 2011 apply to general purpose prepaid cards in 2012?

The year 2011 was nothing less than a roller coaster for the payments industry, which saw a lot of changes and new initiatives. Some notable developments were the Durbin Amendment, creation of CFPB, NFC initiatives from the likes of Google, Visa, Verizon, AT&T and others, a slew of mobile apps for payments and digital wallets, Square’s dongle taking off and several others following suit, an increase in credit card spending and a fall in delinquencies. 

From amongst these developments, MyBankTrackerTM identified five key trends in credit cards. 

Let us look at these trends and see if they will spill over into the world of prepaid cards, which had a growth story of its own in 2011 (Eight Annual Prepaid Forecast Report from Mercator):

Credit Card Trend 5: Mobile Rewards Redemption

As mobile banking applications evolve to offer the same capabilities as the online account interfaces, rewards redemption is making its way to smartphones.

Discover upgraded its mobile apps so that customers can redeem their cash back balance through direct deposit, statement credit, or eCertificates. An eCertificate is an electronic gift code that can instantly be used to make purchases at participating brand partners.

Citibank released an app dedicated to its ThankYou Rewards program which lets customers redeem reward points on-the-go. In collaboration with Best Buy, the app allows users to scan merchandise with their phones to see the cost in terms of points. Purchased items can be picked up at the store or shipped to an address.

Will this trend spill over into prepaid cards?

Historically, prepaid cards have not been associated with rewards and loyalty, let alone rewards redemption through mobile phones. This is because prepaid cards were considered to be for the unbanked and less credit worthy customers. Those who needed them bought them despite heavy fees and the card issuing companies did not feel a need to attract customers with rewards. None of the top five prepaid cards advertised at have rewards associated with them; only two of top 10 have some kind of rewards. 

But a lot has changed in the last few years: people are avoiding credit to stay credit worthy, debit fees have risen significantly and revenue from debit (interchange) has been capped at about half of what they had been. Traditional credit card issuers such as American Express, Citi Bank and Discover have jumped into prepaid cards to acquire new customers and revenue streams, intensifying the competition in this field and creating a need for some kind of incentive to retain the customer. Also, now prepaid cards are being issued to the non-needy customer (budget planner, traveler, debit fee avoider) who needs a little more than the immediate tangible benefits of the card to be attracted to a prepaid card offer. 

For the prepaid card issuing companies and retailers, getting customer behavior data from rewards and redemption can be very useful in selling them the right kind of products as well.

Rewards redemption through mobile is more effective because many customers have their phone with them always and the devices are location aware, making rewards more targeted and redemption more feasible.

So, yes, we will see rewards being generally offered with prepaid cards and also see mobile apps for rewards redemption.

Credit Card Trend 4: No preset spending limit

The invention of the “no preset spending limit” feature is being highlighted as a so-called “perk” that may actually pose danger to the consumer.

Many cash back/rewards credit cards will offer this feature to customers who have better credit histories. Examples include Bank of America’s BankAmericard Cash Rewards card and Citi’s ThankYou cards.
It lets customers spend past their assigned credit lines without incurring over-the-limit fees. Consumer advocates warn against the allure of “no preset spending limit” due to the increased possibility of overspending.

Will this trend spill over into prepaid cards?

Prepaid cards by definition can spend only the funds that have been added to them. So this trend does not apply to prepaid cards.

Credit Card Trend 3: No Foreign Transaction Fees

The average credit card will charge a 2-3% fee on purchases made outside of the United States. For the frequent international traveler, this foreign transaction fee can represent a significant expense. But, many card issuers are tossing out this fee on certain cards.

In November, Discover stopped charging foreign transaction fees on all of its cards – like Capital One. Citi, American Express, and Chase have eliminated foreign transaction fees on their more prestigious cards.
It wouldn’t be surprising to see less of this fee, especially on cards for frequent international travelers.

Will this trend spill over into prepaid cards?

A per event fee is the main source of revenue from prepaid cards and a foreign transaction is too attractive an event for the card issuers and processors to not charge the fee. So, no, this trend will not carry over to mainstream prepaid cards.

Credit Card Trend 2: EMV

Throughout the year, the five biggest U.S. banks have begun issuing credit cards that carry EMV chip technology. The cards are currently only available to corporate and more affluent customers but the technology will be making its way to every U.S. credit card.

EMV chips are regarded as a more secure way to process transaction data compared to magnetic strips. It has also become the standard in many foreign nations due to rampant card fraud. The U.S. has been considered a laggard in adopting EMV.

In August, Visa announced plans that give merchants an incentive to accept EMV cards by October 2015.

Will this trend spill over into prepaid cards?

The key driver behind EMV is fraud reduction. Prepaid cards are a more likely candidate for misuse and fraud because they are offered to anonymous customers or to identifiable customers without any credit checks. The target customers for prepaid are more likely to use public, unsecure networks and lose their card information to fraudsters, who can use the information to recreate and misuse the card. Or a financial criminal might buy a prepaid card with the intention of committing a fraud. EMV technology makes duplicating cards difficult and also makes offline and card not present transactions more secure

In addition, EMV based prepaid cards for use in retail or in transit offer a strong business case for issuers as discussed in an Aconite White Paper.    

For these reasons, main stream general purpose reloadable prepaid cards are likely to adopt EMV technology in the very near future.

Credit Card Trend 1: Mobile Payment Functionality

Taking center stage is mobile payments. Consumers who’ve been quickly adapting to financial management on their mobile devices are eagerly awaiting the day they don’t need to carry a credit card to use it.
Google Wallet launched with Citi MasterCard customers using near-field communications technology for contactless payments.

ISIS, a joint venture by the nation’s largest mobile carriers, has locked in major phone manufacturers and major payment processors that will begin promoting NFC technology on mobile devices in early 2012.
Apple is yet to mention NFC for the iPhone but the technology was on the wish list for consumers who waited to purchase the recently released 4S model.

Will this trend spill over into prepaid cards?

The most notable NFC mobile payment initiative in 2011 was Google Wallet and the cards that currently can be provisioned on the phone are Citi® MasterCard®, the Google Prepaid Card or Store gift cards from participating merchants. It’s not hard to notice that the scale is tilted in favor of prepaid cards already as far as Google Wallet is concerned. The biggest problem (not technology related) is that credit card issuers/banks, network operators and mobile wallet providers are all fighting over who owns the mobile wallet customer and who bags the proceeds from the card use. An unintentional fall-out of this situation will be that mobile wallet providers (Google or ISIS) will issue their own prepaid cards to be provisioned on NFC phones.

So, yes, this trend is very likely to carry over to prepaid; in fact, I believe that prepaid cards will lead this trend. 

About the Author

Manish Gupta is a Marketing Product Manager at 

CoreCard Software is a leading provider of card management systems for prepaid, revolving credit, complex accounts receivable, payday loans, fleet cards and more. CoreCard provides a feature-rich and flexible platform for all prepaid programs, either as licensed software or processing services (SaaS or PaaS).  For more information visit or stop by  CoreCard at Prepaid Expo 2012, booth #622. 

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Thursday, January 19, 2012

China Prepaid In Brief: What You Need to Know

Prepaid TV™ unpeels an appealing, but complex market

By Marc Dresner, IIR

At an estimated 13-17% CAGR, China’s prepaid market (approx. US$230 billion in 2010) is poised to overtake the US as the world’s largest before the decade ends.

It’s a not the model we’re accustomed to in the West—and not without its quirks—but with such a rapid adoption rate, China’s prepaid market has legs and is running fast!

Take gas cards, for example. The two major State-owned gas station operators don’t take credit cards, and dealing in cash is becoming increasingly cumbersome as more and more members of China’s expanding middle class take to the roads in cars. Solution: prepaid petrol cards! And they’re being aggressively pushed.

According to Terry Xie, Director of the International Payments Advisory Service at Mercator Advisory Group, while barriers to entry can prove daunting, China offers significant opportunities for foreign players with the right amount of capital who understand the market.

And Xie says don’t be intimidated by China's increasingly tight regulatory environment; it may actually catalyze growth!

In a three-part interview with Prepaid TV™ – the official streamcast network of Prepaid Expo — Xie provides a blueprint for navigating the world’s second largest prepaid market and some considerations for foreign interests who would like to do business in the People’s Republic.

Click on the links below to tune in!

Part I: China’s Massive Prepaid Market

Part II: Understanding Open Loop

Part III: The Regulatory Environment for Prepaid

Prepaid TV™ is an executive interview series featuring the leading voices in prepaid today, along with a few rising stars that you should know about.

Each month, we’ll deliver fresh insights and answers from a variety of perspectives – networks, banks, retailers, programs and providers – on the forward-facing issues that matter most to the prepaid industry.

Prepaid TV™ is produced by Prepaid Expo, the world’s largest, most comprehensive and independent forum dedicated to meeting the information and business needs of the entire stored value community.

For more information or to register for Prepaid Expo taking place March 12-14 in Las Vegas, please visit

Marc Dresner is IIR USA's communication lead. His background is in trade journalism and marketing research. Prior to joining IIR, Dresner was the executive editor of Research Business Report, a confidential newsletter for the marketing research and consumer insights industry. He may be reached at Follow him @mdrezz.

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Friday, January 13, 2012

Prepaid Expo 2012 - Register by Friday, January 13 and Save!

Register today to Save up to $300! 

Prepaid Expo 2012 is on track for the largest turn-out yet! 

Don’t miss the one event in 2012 where there entire Prepaid Industry will meet.

Check out the latest Agenda & visit our Website to take advantage of the networking opportunities, all included in your registration price.

Here are just a few of the companies you will meet at Prepaid Expo 2012

ABnote North America 
ACE Cash Express 
AMC Theatres 
American Airlines 
American Express 
American Suzuki Motor Corporation 
Archway Marketing Services 
Australia Post 
Axis Global Accident & Health 
Bank Of Internet 
Bath & Body Works 
Benefit Resource Inc 
BET Networks 
BitCash Inc 
Blackhawk Network 
Bryan Cave LLP 
Cabelas Inc 
Cadillac Fairview 
Card Resource Group Inc 
Cash Connection 
Cash Pass Network 
CenterState Bank 
Central National Bank 
Ceridian Stored Value Solutions 
Check Into Cash 
Cineplex Odeon 
Corecard Software 
Cornerstone Marketing 
CPI Card Group 
Discover Financial Services 
DolEx Dollar Express 
Dunkin Brands 
EFT Source Inc 
Epay Fairmont Raffles Swissotel 
First Convenant Bank 
First Data 
FirstView Financial LLC 
GE Capital 
Geddes Group 
Genesis Financial Solutions Inc 
Giant Eagle Corporation 
Gift Card Planet 
Global Cash Card 
Green Dot Corporation 
Groupon Incorporated 
H&R Block 
Hallmark Cards Inc 
Hello Gift Cards 
i2c inc 
Insight Cards 
Intuit Corporation 
Itz Cash Card LTD 
JC Penney Incentive Sales 
Kaiku Finance LLC 
Kiboo LLC 
LifeWork Search 
LL Bean Inc 
Mandarin Oriental Hotel Group 
Marriott International Inc 
MasterCard Worldwide 
Murphy USA 
NetSpend Oberthur Technologies 
Piper Jaffray 
Pitney Bowes 
Plastic Jungle 
Red Robin Gourmet Burgers 
RedGear Technologies 
Redwood Hills Financial Group 
Regal Entertainment Group 
Republic Bank of Chicago 

Royal Performance Group
Schulte Roth & Zabel
SpaFinder Inc
Speedway SuperAmerica LLC
Speedy Cash Holdings Corp
State Farm Bank
Sumitomo Mitsui Banking Corporation
Sunrise Community Banks
Target Financial Services
The Home Depot
Travelocity Incentives
TSYS Merchant Solutions
TxVia Inc
Universal Orlando
US Bank
US Postal Service
Vera Bradley Designs
Western Union
Westfield LLC
Whole Foods Market
and more 

Register Today To: 

• Sign up for Speed Networking - Fill out a profile beforehand to let us know the types of people you'd like to meet, & we'll do the matching for you! When you arrive at the Prepaid Connect Speed Networking event, you'll receive an itinerary of the fellow attendees that fit your profile. 

• Be the First to See Who is Attending and Schedule Meetings - Prepaid Expo's proprietary Prepaid Marketplace allows you to see who is attending before you arrive, schedule meetings in advance, follow up with contacts after the event and make your own calendar so you don't miss the sessions you most want to see (launching at the end of Jan). Only available to registered & paid attendees. 

• Schedule a One-on-One Strategy Meeting - Tired of spending days at a conference and coming home with little direction about what to do with your business? Schedule a meeting at Test Drive an Expert with one of our experts across various prepaid specialties & you'll have definitive insight to the next steps you need to take. 15 minute mini-strategy meetings can be booked before you arrive or on-site. 

Don’t miss the only opportunity in 2012 to meet with the largest gathering of prepaid professionals in the world! 

To register today and save up to $300 on your registration, Click Here 

For more information on the program & to download the agenda, Click Here

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Wednesday, January 11, 2012

Reminder: The Next Big Thing in Prepaid Is Yours!

Prepaid Expo is proud to announce “The Next Big Thing” – a program showcasing the latest in prepaid innovation!

Whether you’re an established company, a start-up or a new entrant to the prepaid space, “The Next Big Thing” is a major opportunity to introduce YOUR pioneering ideas, technologies, products and services to senior executives, venture capitalists, industry stakeholders and trade press at Prepaid Expo 2012. 
To participate, simply apply online at by January 27, 2012

Who Should Apply?

Any company offering or developing a new product or service that fits one or more of the following criteria:
·         Game Changer: Is it a visionary new concept? A fresh solution to an existing challenge? We want to hear about it!

·         Customer Centric: Is it user-friendly? Will this product/service improve the prepaid experience for businesses and/or consumers?

·         Advancing Prepaid: Will this innovation help increase adoption of prepaid and related products/services?

Why Participate?

Participating in “The Next Big Thing” has many benefits:
·         Exposure to 1700+ prepaid professionals
·         Attract new customers
·         Get expert feedback
·         Attract VC funding
·         Get an edge on competitors
·         Generate media interest and press coverage

How Do I Participate?

Prepaid Expo is accepting applications online at until January 27, 2012.  Once applications close, our advisory board will narrow down selections based on relevance to the prepaid industry.  Winners will be notified by February 10, 2012 with the opportunity to demonstrate their product or service March 12-14, 2012 at Prepaid Expo in Las Vegas—the world’s largest gathering of prepaid industry experts and leaders!

If you have a product or service that the prepaid world needs to know about, register for Prepaid Expo’s “Next Big Thing” online at

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Wednesday, January 4, 2012

Breakthrough Category in Mobile in 2012? Mobile Payments

According to the 2012 Mobile Predictions Annual Survey results released this week from Chetan Sharma Consulting, which drew from the collective insight of "executives, developers, and insiders from leading mobile companies and startups from across the value chain and around the world," the panel voted "mobile payments and mobile commerce as the top two category that will find their voice" this year and "messaging and commerce as the top two categories for the developing world while consumers in the developed nations will likely gravitate towards commerce and location based services" in 2012.

Meanwhile, the mobile payments/commerce space will be defined by Visa, Operators and Google, who will continue to drive the payments/commerce space, according to the survey panelists.

So what's going to work in the mobile payments space? It looks like the focus will be on "consumer involvement in 2012 within proximity based solutions and commerce of physical goods."

Do you agree with these results? What are your predictions? Tell us your thoughts below.


Download: 2012 Mobile Predictions Annual Survey PDF here.

Valerie M. Russo is a Senior Social Media Strategist at IIR USA with a technology, anthropology, marketing and publishing business acumen.  She will be attending Prepaid Expo 2012 in Las Vegas, Nevada on March 12-14th, and covering the event live. She is a published poet and also maintains a literary blog. She may be reached at Follow her @Literanista.

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