The Prepaid Press - April 15, 2008 - (Page 23)

RETAIL FOCUS April 15 · 2008 - 23 PREPAID IOI by Professor Retske Stupid Card Tricks OK students, today we are going to talk about what some consumer advocates call the ”dark side“ of prepaid services. Recently, this dark side has gotten a good bit of media attention. Everybody in prepaid needs to understand the issues and how to explain them to customers. Be forewarned that there are a wide variety of fee structures and conditions, and no two may be alike. Let’s start with the simplest first, closed loop for the gift certificates to be sold by anyone other than the redeeming retailer. The issue is in tracking the value of the account and registering purchases, a perfect application for a transaction network. So, the idea came up of using one of the numerous transaction networks out there to create a prepaid card that would only work at specific locations. Many of the gift cards ride on one of the ”brand name“ networks, which have been configured to work for prepaid gift cards. From the consumer point of view, closed loop cards offer the best of all worlds; 100% of the value is loaded on the card, there are no fees, and the balances usually do not expire, ever. This is possible because the retailer is paying all the fees to the transaction network. The merchant who sells the card gets a small commission, and the issuing retailer is guaranteed to get 100% of the sales from the card, so they are willing to pay the fees, and let the customer hold the card as long as they want. There are no Stupid Card Tricks here, assuming the retailer stays solvent. The next type of card is the open loop prepaid card. The most visible examples are cards with branding on them, like Visa, MasterCard, and American Express. These cards can usually be loaded with any amount, and may be able to be recharged later on, giving them some of the functionality of an ATM bank card. But, in this case, the card can be used wherever that branded card is accepted. There is no single retailer that will get the sales, so the retailer where purchases are made is unwilling to fund the use of the card. The merchant who sells the card wants to be paid for selling them, as does the transaction network for handling the transactions. So, let’s see, who can we ask to ante up the fees? Hmmmm? Well, the only one left is the buyer of the card. And, that includes the recipient, if it is a gift. The application of fees on open loop cards has attracted a lot of media Continues on page 24 From the consumer point of view, closed loop cards offer the best of all worlds; 100% of the value is loaded on the card, there are no fees, and the balances usually do not expire, ever. gift cards. These cards are for use in one retail establishment only. They grew out of gift certificates that consumers used to buy for gift giving. These certificates were usually on a printed form, and sold in the same retail establishment where the gift certificate was redeemed. Actually, maybe I should not say ”was,“ since many establishments, particularly small proprietor owned businesses, still issue them. These certificates are really only a formal representation of the account, which is kept on the books of the issuing retailer. If the issuing retailer has more than one location, gift certificates can be a problem, if cards are to be used at all the locations. This approach also makes it more difficult CAESARS PALACE, LAS VEGAS · AUGUST 19 – 21, 2008 The Prepaid Press Expo is the one event that bridges all sectors of the prepaid services industry, and all players within each sector. It is the primary point of convergence for prepaid services in 2008, and an event you won’t want to miss! THE PREPAID FORUM AT TPPEXPO’08 LEARN Register for Prepaid’s Most Comprehensive Conference: Grammaticus at tppEXPO’08 Day One: Tuesday, August 19, 2008 Prepaid Long Distance Day Two: Wednesday, August 20, 2008 Prepaid Wireless Day Three: Thursday, August 21, 2008 Prepaid/Alternative Payments ALL GRAMMATICUS (CONFERENCE) PASSES INCLUDE CONFERENCE(S), EXPO, FLOOR DEMOS, TOGA PARTY. Each Industry Track (one day pass) $200 through May 31 $275 thereafter $325 on site Full Grammaticus Pass (all three days) $499 through May 31 $599 thereafter $675 on site tppEXPO’08 has partnered with industry leading research rm and conference organizer, The Pelorus Group, to help produce the industry’s most informative and most a ordable conference program for prepaid services. These tracks were created speci cally to provide you with the critical information you need to learn, adapt, and thrive in today’s competitive prepaid marketplace. Emperor Sponsor Senator Sponsor Grammaticus (Conference) Partner Giornale (Media) Sponsors Centurion Sponsors V I S I T P R E PA I D P R E S S E X P O. C O M F O R M O R E I N F O R M AT I O N FREE EXHIBIT HALL PASS THROUGH MAY 31! http://PREPAIDPRESSEXPO.COM http://PREPAIDPRESSEXPO.COM

Table of Contents Feed for the Digital Edition of The Prepaid Press - April 15, 2008

The Prepaid Press - April 15, 2008 Motorola to Split Mobile Payments: The Saga Continues Contents The Retske Report: Election Year and Woody Hayes Regulatory Rundown: 2008 First Quarter Mobile Update 5 Minutes with Mark Herrington tppEXPO’08 Spotlight New Handsets Announced at CTIA Prepaid Wireless in Brief Prepaid Wireless Roundup Virgin Mobile Reports Earnings of 6 Cents Movida Files Chapter 11 LiveWire Mobile Acquires Groove Mobile Boost Selects Vesta for Transactions RadioShack to Offer Trumpet Mobile Service Virgin Offers New Pay as You Go Plans Book Review: Webster’s New World Telecom Dictionary Management Changes at IDT Spot Rates Calling Cards in Brief The State of Prepaid Technology: Productive Coexistence FTC Asks Court to Halt Prepaid Calling Card Scam Louisiana Community Mulls Tax on Prepaid Cards Pactolus Wins VON Magazine Award iBasis Lowers Pakistan Rate for Pingo The Legal Line Biometric Update: Keep Your Shirt On AccountNow Ends Upfront Fees Evolution Benefits Acquires SmartFlex Payments in Brief NetSpend to Offer Bill Payment and Top-up Union Bank Introduces Contactless Card Ingenico Announces Development Kit Prepaid 101: Stupid Card Tricks PLS Offering Walk-In Bill Payment Spend Gift Cards ASAP Credit Card Breach at Hannaford Bros. NACS Withdraws Opposition to Tobacco Bill Study Finds Gift Card Packaging Increases Sales NACS Names International VP Inflatable Display Provides Inexpensive Signage Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - April 15, 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.