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SAN FRANCISCO, January 13, 2009 – Javelin Strategy & Research (www.javelinstrategy.com), today announced availability of a new report about the prepaid card market, which highlights consumer usage and what financial institutions can gain through a prepaid program—more specifically, how a prepaid card issuer should assess and choose a processing partner in order to obtain the greatest success and return on investment from their prepaid card programs.
According to Javelin, the processor choice is often overlooked and undervalued by prepaid program managers. But growth in the complexity of prepaid products, as well as year-over-year transaction volume growth underscores the criticality of selecting the right processor to keep pace and optimize investments long-term. Javelin delves into four key components of an effective prepaid processing program, including managing the card, serving the cardholder, executing the transaction and, getting the most from the platform. A detailed discussion of each component provides decision-making guidance to prepaid issuers chartered with managing a program. The study also takes on several of the common misconceptions about the processor selection criteria, dispelling myths and setting the record straight based on perspectives from practitioners and current market trends.
“Consumers are becoming more reliant on prepaid cards as a primary payment method as the variety of prepaid products expands,” said Javelin President and Founder, James Van Dyke. “This behavioral shift offers financial institutions and other prepaid issuers an opportunity to not only establish longer-term relationships with account holders, but create additional revenue.”
A Wide Array of Prepaid Card Products Make This Payment Method Attractive
Prepaid card applications span a wide range of consumer needs, including teen financial management, gifts, travel, online and in-store shopping, payroll and healthcare benefits. According to the report, with multiple loading and reloading mechanisms available today, prepaid cards have longer-term usage and are less disposable in nature—making prepaid programs attractive to financial institutions as a versatile method to increase revenue.
Prepaid is Not Just for Lower Income and Younger Consumers
According to the study, consumer usage of prepaid card products is growing and extends well beyond the commonly assumed demographics of lower income and younger consumers. Bruce Cundiff, the report author and Javelin’s Director of Payments Research and Consulting, said, “Consumer usage has spread relatively evenly among most income groups, with middle income Americans demonstrating the highest usage of prepaid products both online and offline. What is interesting to note, the multi-channel nature of the prepaid relationship with middle-to-higher income consumers demonstrates and validates the revenue stream capabilities that prepaid issuance provides.”
Security, Risk Mitigation and Regulatory Compliance
Javelin finds that security is paramount in prepaid card issuance, not only in terms of fraud mitigation but also in the scrutiny that issuers face to comply with regulatory Homeland Security standards—anti-money-laundering (AML) and know your customer (KYC) initiatives. Because security matters, prepaid card issuers may be increasingly held accountable for the actions of not only their immediate constituents and customers, but also the indirect usage of their products.
Learn More About Javelin’s New Report
For financial institutions, payment companies and other third parties in the prepaid market, this report delves into the primary components of a prepaid platform and processor relationship. It challenges common myths and describes important risks surrounding prepaid processing. Javelin’s Prepaid Product Evolution Report helps prepaid program mangers better understand how to navigate creation of a prepaid program or expansion of an existing one in order to increase revenue. Javelin provides an overview about the study at : www.javelinstrategy.com/prepaidproductevolution.html
Or click here to download the brochure (PDF
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