Abstract
Second of Four Consumer Reports from Mercator Advisory Group' s Primary Data Series
Boston, MA - September 10, 2009 - - The prepaid card industry continues to
grow at a phenomenal rate. New card implementations are constantly being added
by program sponsors and managers and strong distribution channels such as
prepaid malls and online vendors are giving consumers more access to new and
old prepaid products. However, consumer use of prepaid products is adding to
both the complexity and strong growth of the product, with consumers finding
new uses for prepaid cards such as household budgeting and as a checking
account/debit replacement.
Based on primary consumer surveys the Consumer Prepaid Cards: Growing Beyond
the Retail Core report illustrates how consumer behaviors and preferences are
contributing to the growth and intricacy of prepaid, and why this trend is
likely to continue. This is the second Primary Consumer Payments report being
offered as part of Mercator Advisory Group' s newly launched Primary Data
Series (PDS). This new offering by Mercator Advisory Group provides access to
a library of valuable resources that combine both relevant payments and
banking data with experiential analysis focused on today' s most critical and
strategic issues.
"The consumer viewpoints documented in this survey confirm the reality that
for cardholders as well as issuers, prepaid means many things to many people."
Ken Paterson, VP for Research Operations at Mercator Advisory Group and the
primary author of the report comments. "Some may be firmly entrenched in using
a single familiar category like closed loop prepaid cards purchased in-store.
Others may have discovered prepaid as a DDA/debit alternative or a payment
alternative for online purchases. And others with no experience may yet
discover the category as a merchant issues a rebate or credit via a prepaid
card. The consumer prepaid marketplace has different meanings for all, and
therefore no shortage of growth opportunities."
Highlighting consumers' evolving use of gift/prepaid cards, this report is
based on a national sample of 1,012 online consumer survey panel survey
responses completed between May 28 and June 4, 2009. The report outlines
consumer patterns of card usage and purchase patterns critical for issuers,
program managers, and program sponsors in this dynamic payment segment.
Highlights of the report include the following:
- As a broad category, private label retail cards (closed loop) are the most
commonly and frequently used prepaid cards among the 45% of consumers making
prepaid card purchases in the last year.
- While consumers most often say they buy a specific retailer' s gift card in
that retailer' s store, distribution through other retailer locations in
"prepaid malls" and online are critical sales channels. Consumers often have a
specific card and purchase location in mind, while at other times may be more
prone to browse.
- In spite of last year' s concern about retailer bankruptcies and how they
might affect prepaid card sales, consumers indicate they have become more
selective of the retailers they choose rather than broadly avoiding these
cards. However, general purpose network-branded cards did reap some benefits.
- While gift-giving motivates most purchases, consumers have many purchase
motivations. In particular, nearly one in five card purchasers use cards to
help them manage the household budget, or the budget of a friend/family member
outside the household.
- Consumer experience with reload capabilities of general purpose cards is
relatively low, but closed loop reload experience, such as at coffee vendors,
is more widespread.
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