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Prepaid Cards & the Incentives Market: Challenges of Bringing a High Value Feature Rich Product into an Already Complex Market


Boston, MA
January 2009

Prepaid Cards & the Incentives Market: Challenges of Bringing a High Value Feature Rich Product into an Already Complex Market

NEW RESEARCH REPORT BY MERCATOR ADVISORY GROUP

While incentive cards of all types had been on a slow adoption curve with traditional buyers having experimented with the vehicle, the market has shifted to more rapid growth in recent years with many corporate users citing prepaid cards as the most effective vehicle for providing rewards and incentives. The rate of growth and market acceptance of prepaid applications in the reward recognition and incentive market is amazing by any measure.

The growth of closed-loop cards in the space is continuing at a modest pace, while open-loop implementations are growing rapidly, especially as more companies move towards allowing end users to make choices in the actual gift itself. Mercator Advisory Group estimates that Corporate and Consumer Incentives collectively represent the second largest open-loop market segment at $6.7 billion.

This report provides an overview of the Consumer & Employee/Partner Incentive market, identifies key stakeholders, explains the complex corporate market structures that must be considered when going to market, outlines the size of the prepaid incentive card segments and discusses the effectiveness and feature functionalities of today's prepaid offerings that make them a powerful incentive product.

Report Highlights:

  • The rate of growth and market acceptance of prepaid applications in the reward, recognition and incentive market is amazing by any measure. Key drivers have increased market familiarity with the applications and consumers' growing preference for plastic over paper-based payments.
  • Mercator Advisory Group has determined that 2007 load on all prepaid incentives, (open and closed, Consumer & Employee/Partner) amounted to $17.6 billion, a 22.7% increase from 2006 ($13.9 billion).
  • Program Managers are building a personal brand connection between sponsors and participants though strategic branding initiatives and expanding management's ability to use the card based platform as a communication and goal setting device.
  • The growth of closed-loop cards in the space is continuing at a modest space, while open-loop implementations are growing rapidly.
  • Service providers will have to focus on developing better data analytic capabilities for ROI analysis.

One of the 7 Exhibits included in this report

This report contains 40 pages and 7 exhibits.

Brent Watters, Senior Analyst in Mercator Advisory Group's Prepaid Advisory Service and principal analyst in this report, comments, "Companies are not thinking about measurements and analysis, such as, who they are touching with their card, or how comfortable recipients are using the cards and where are they using the cards? The data that is captured by the program manager can provide answers to these questions, and bring about awareness as to what is driving recipients and participants so their programs can be built smarter."

Some recently released reports from Mercators Prepaid Advisory Service:

A Guide to Achieving Greater Prepaid Volume: Six Channels That Drive Prepaid Success
The "Local" ISO: Strategies for Hometown Merchant Services
Open-Loop Retail Reload Networks: Drivers of Increased Retention or Agents of Churn?
Innovation Loves a Crisis - Economic Uncertainty Drives Gift Cards of all Shapes, Sizes, and Values
Members of Mercator Advisory Group have access to this report as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits.

Please visit us online at http://www.mercatoradvisorygroup.com/.

For more information call Mercator Advisory Group's main line: 781-419-1700 or send email to info@mercatoradvisorygroup.com.