Pre-paid and Gift Cards - US - January 2012
The prepaid and gift card business is experiencing a comeback as the economy slowly recovers from the recent recession. Prepaid cards are among the fastest-growing method of payments, with the number of transactions increasing nearly 23% per year between 2006 and 2009 (source: 2010 Federal Reserve Payments Study).
Use of these cards has expanded beyond general reloadable cards (GPRs) and they are now used by corporations and government agencies to pay salaries and benefits, saving these organizations money and making it easier for people—especially the unbanked—to gain access to their money. Gift cards are benefiting from the improving economy, although the precariousness of the recovery is certainly having a dampening effect.
Demographics and technology are also positive factors for both sectors, as growth in un- and underbanked populations, historically heavy users of prepaid cards, is growing, and as mobile technology increases in presence and sophistication.
What you need to know:
- In light of the struggling economy, what are the near term prospects for the prepaid and gift card industries?
- How might legislation restricting interchange fees for debit card transactions help the prospects for prepaid card usage?
- What are the sectors of the economy or types of corporations that will be the primary drivers of growth?
- What do consumers think? Might their disenchantment with banks and the entire banking industry cause them to look for banking alternatives?
- The un- and underbanked have been the mainstay of the prepaid card business, and that population has historically been made up largely of minorities and immigrants. What are the forecasts for these groups going forward?
- Teens are also a lucrative market for prepaid cards. Will this continue or are tween and teen preferences changing?
- How are companies using prepaid and gift cards as incentives and in loyalty programs?
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