Prepaid Distribution Strategies in the United States 2013

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New Mercator Advisory Group research shows how prepaid program managers are driving volume for program profitability.

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Prepaid Distribution Strategies in the United States 2013

  1. 1. Prepaid Distribution Strategies in the United States December 2013
  2. 2. Prepaid Distribution Strategies in the United States 2013 For prepaid card program managers, distribution is top priority. New research from Mercator Advisory Group, Prepaid Distribution Strategies in the United States, examines the methods available to prepaid card program managers as they look for new opportunities to get their cards in the hands of customers. The report provides an overview of how prepaid card issuers and program managers can expand their reach by placing their cards in new locations and leveraging new technologies. The report also discusses the volume of dollars loaded onto prepaid cards in both direct-to-consumer and business-to-business channels. Distribution plans must include both business and technological facets, and this research covers the current state of the digital card market. While these cards and channels will become increasingly important, until now, adoption has been slow. The prepaid card industry needs to study what business channels and technological channels will give them a competitive edge. It is not enough to simply be where your competitors are or to beat them to a market. The report also considers the actions issuers and program managers should take regarding mobile wallets. . 2014 Mercator Advisory Group
  3. 3. Ben Jackson Sr. Analyst PrepaidAdvisory Service Mercator Advisory Group "Due to thin margins, prepaid programs depend on volume for profitability. So, getting cards into many hands is critical to success," Ben Jackson, senior analyst, Mercator Advisory Group's Prepaid Advisory Service and author of the report comments. "Program managers, whether handling open-loop or closed-loop cards, have a variety of distribution options. Understanding those options requires a grasp of both business and technological considerations." 2014 Mercator Advisory Group
  4. 4. Highlights of the full report • Ingredients of a strong distribution strategy for most prepaid programs • Advances in technology that offer new ways to sell cards to customers • Hybrid approaches for selling general purpose reloadable (GPR) cards by using both online and in-store placements to get cards into the hands of customers • Business considerations that need to be included in distribution strategy such as channel choice, partners, cost of delivery, regulatory compliance, competition, and brand awareness • Technological considerations, such as new form factors for delivery, activation, and redemption 2014 Mercator Advisory Group
  5. 5. Figure 2: Map of the Main Prepaid Distribution Channels PREPAID CARD ISSUER (retailer restaurant GPR issuer, content provider) , , OWN RETAIL OUTLETS OWN WEBSITE 4 1 2 CONSUMER CONSUMER INTERNAL CHANNELS THIRD-PARTY OWN B2B SALES DISTRIBUTOR/ PPD MALLS 5 3 WEB AGGREGATOR/ DISTRIBUTOR SOCIAL MEDIA WEBSITE 6 CORPORATE BUYER THIRD-PARTY RETAILER EMPLOYEE/ CLIENT/ CONSUMER CONSUMER 7 CONSUMER EXTERNAL CHANNELS Source: Mercator Advisory Group © 2014 Mercator Advisory Group 8 CONSUMER
  6. 6. About the Full Report This report is 27 pages long and contains 10 exhibits. Companies mentioned in this report include: -Eleven Inc., 500 Startups, A-Grade Investments, AccountNow Inc., Affinion, Aimia Group, American Eagle, American Express Co., Atomico, Bass Pro Shops, Best Buy Co., Inc., Bed Bath & Beyond Inc., Blakchawk Network Holdings Inc., CashStar Inc. Dillard’s, Inc., Dimpledough Inc., Dunkin’ Brands, epay, Euronet Worldwide Inc., Facebook, Founder Collective, Gap Inc., Giftango, Inc., Google Inc., Google Ventures, Graylock Partners, Green Dot Corp., Gyft, H&M, Hass Portman, InComm, InteliSpend Prepaid Solutions, Karlin Ventures, LevelUp (SCVNGR Inc.), Martiz, Merchant Customer Exchange (MCX), Monitise plc, National Retail Federation, Netspend Holdings Inc. (TSYS) Nordic Financial Services Group SEB, Qualcomm Ventures, Racetrac, RushCard (UNiRush LLC), Sephora, Social + Capital Partnership, Starbucks Coffee Co., Target Corp., Wal-Mart Stores, Inc. (Walmart), Wrapp 2014 Mercator Advisory Group
  7. 7. About the Full Report Members of Mercator Advisory Group’s Prepaid Advisory Service have access to these reports as well as the upcoming research for the year ahead, presentations, analyst access, and other membership benefits. For more information and media inquiries, please call Mercator Advisory Group's main line: (781) 419-1700, send e-mail to info@mercatoradvisorygroup.com. For free industry news, opinions, research, company information and more visit us at www.PaymentsJournal.com. Follow us on Twitter @ http://twitter.com/MercatorAdvisor.. 2014 Mercator Advisory Group
  8. 8. About Mercator Advisory Group Mercator Advisory Group is the leading independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com. 2014 Mercator Advisory Group

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