Mobile Opportunities for Closed-Loop Issuers

New research by Mercator Advisory Group strategically examines the use of mobile prepaid cards by retailers and other closed-loop issuers

Boston, MA — The increase of smartphone ownership has created a new channel for the sale and redemption of closed-loop prepaid cards. If payments companies have their way; smartphone users will soon be using their devices to make payments, not just through buying things using an Internet application, but also at the point of sale. One could argue that the goal seems to be replacing all analog forms of payment and drawing everyone into a larger network where all of a customer’s behavior can be tracked, cataloged, and used to drive future purchases.

Much of the attention on mobile payments has centered on open-loop payments because they would open up the market to a variety of applications and get mobile payments closer to the ideal mentioned above. The real successes in mobile, however, have come on the closed-loop side, where issuers have opportunities to use this new channel to sell more cards and in some cases to solve problems of moving customers in and out of their stores, providing rewards, and creating new kinds of shopping experiences.

Mercator Advisory Group’s new report, Mobile Opportunities for Closed-Loop Issuers, examines some current applications in play as well as mobile considerations for closed-loop issuers.

“Finding technology that works with the business plan should be the first consideration. Issuers need to avoid the temptation of adopting a solution in search of a problem,” says Ben Jackson, author of the report and Senior Analyst with Mercator’s Prepaid Advisory Service. “Ultimately, focusing on the needs and desires of the customer will answer the why and how questions of mobile payments more effectively than anything else.”

Highlights of the research findings include:

The successful implementation of closed-loop mobile payments applications by several issuers

The impact of increasing smartphone ownership will have on mobile payment offerings for customers

The three ways closed-loop mobile payments are typically executed

Success stories from Fandango’s use of mobile payments and mobile ticketing and Starbucks’ mobile application

The reasons other retailers still feel reluctant to invest in mobile payments

The concerns closed-loop issuers need to consider when implementing mobile payments

One of the seven exhibits included in this report:


This report contains 20 pages and seven exhibits.

Companies and services mentioned in this report include: Fandango, Gifttango, Starbucks, and Transaction Wireless.

Members of Mercator Advisory Group’s Prepaid Advisory Service have access to this report as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits.

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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