Mercator Blog

Mobile Gift Card Distribution Offers Advantages for Each Player in Prepaid Distribution Chain
Date: March 26, 2014
Tim Sloane
Vice President, Payments Innovation
The most recent research report from Mercator Advisory Group’s Prepaid Advisory Service, Managing Gift Card Operational Complexity and Enabling a Mobile Channel Platform, identifies how mobile gift card applications can be used as a new business-to-business-to-consumer (B2B2C) mobile gift card distribution channel. A gift card issuer’s mobile app can now be integrated into the mobile wallet of either general purpose reloadable (GPR) or debit portfolio suppliers.
Mercator Advisory Group’s Prepaid Advisory Service members have access to five blogs described below that explain the benefits of the mobile gift card distribution channel for each of several types of players:
What Every Issuer (Open or Closed) Needs to Know About Mobile Gift Card Distribution discusses options to be evaluated before launching a prepaid mobile application, which includes appraising the size of the mobile gift card distribution opportunity to guide the investment and selection of an appropriate mobile platform.

GPR Issuers That Adopt Mobile Gift Card Distribution First Will Win explains that general purpose reloadable program managers will need to move quickly to win over the name brands that matter most to their target demographic, the low- and moderate-income prepaid card users. Locking up key merchant relationships is the best route to differentiation in the market. The blog discusses options that fall in between a full implementation of B2B2C mobile gift card distribution and a more basic strategic relationship.

Financial Institutions Can Avoid Disintermediation by Google, MCX, and PayPal points out that debit card issuers can benefit from B2B2C mobile gift card distribution because it closely aligns their goals with those of merchants that issue closed-loop gift cards, and does so without the disintermediation that results when merchant partnering is implemented through the wallets of Google, MCX, or PayPal, which work with merchants to deliver unique consumer value independent of the bank card the consumer has in his or her wallet. The blog also identifies advantages that lead to increased income.

Jump Ball for a New Mobile Distribution Business Opportunity describes the new opportunity for third-party aggregators that connect the parties involved in B2B2C mobile gift card distribution. This solution is significantly different from the functions provided today by third-party distribution suppliers, since those suppliers typically only activate the gift card and settle the discounted purchase price to the closed-loop gift card merchant issuer. This role is more wide ranging than the role performed by third-party distributors today.

Applying Mobile Gift Card Distribution in the Real World: A Proposed New Mobile Strategy is a blog proposes a new mobile strategy for prepaid. It applies the mobile distribution model, which ranges from a tightly coupled payment integration to a looser business relationship, to a mythical QSR similar to Subway. The goal is to see if we can evaluate how mobile gift card distribution might be used to gain greater market share, customer visits, and new customers.