Abstract: When a prepaid card program will achieve profitability is proving difficult to calculate. This challenge comes from a range of variables that needs to be factored into the profitability calculations, and while some of these variables are well known, many are new and specific to particular prepaid program implementations. Because these variables are typically addressed on an ad hoc basis, initial calculations of program profitability are often far from the mark. Players already active in the prepaid industry regularly confront this reality. New prepaid participants, or potential sponsors of prepaid products, will be daunted by calculating profitability in a constantly changing environment. Miscalculations can stem from various sources - legal and regulatory, merger and acquisition activity, even divergent perceptions of the different players in the prepaid value chain who bring the prepaid program to market. In this Research Note, Mercator discusses how to navigate toward profitability in prepaid while avoiding some of the difficulties that can run the ship aground.This is a Mercator Advisory Group Note and is available through a membership services relationship. It is also available for one-off purchase.
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