The Prepaid Press - September 15, 2008 - (Page 20)

PAYMENTS September 15 · 2008 - 20 Dateline Expo: Prepaid and Alternative Payments Update 2008 By Gene Retske Payment Market Joel Stanton, Senior Analyst of Lightspeed Research, an online marketing research company, broke the prepaid industry down into two groups, closed loop and open loop. Stanton believes that closed loop gift cards are becoming a bit mature, which is reflected on his Closed Loop chart as a large circle in the lower right corner. Similarly, the Open Joel Stanton Loop chart shows Lightspeed Research the various prepaid products in comparison (See Page 21). “Open loop is growing at a faster rate off a smaller base than closed loop,” said Stanton. “But, there are some stellar growth rates out there, with government benefits and refunds. Even open loop gift cards are growing at above the industry average and are already quite large.” Tom Honey of Better ATM Services addressed the most important factors when selecting market distribution channels for prepaid gift cards, and advised to focus on the “3 C’s” Tom Honey of channel selection, Better ATM Services Convenience, Constraints and Costs. “The key issue,” opined Honey, “is, and always has been, distribution.” He also said the key consumer reason for buying prepaid gift cards is convenience. When you combine these two factors, and look at the wide availability of ATMs, Honey sees an opportunity to leverage the capacity of ATMs to distribute gift cards. ATM cash transactions have declined 80% in the last 4 years, because consumers are using debit cards for transactions instead of cash. Honey says this makes the use of ATMs a viable alternative for the distribution of gift cards. Changing economic conditions, a growing immigrant population and new technologies are creating a perfect storm of opportunity for prepaid and alternative payments. We already know how incredibly successful closed loop gift cards have become, but they are just the tip of the iceberg. Just like Prepaid Wireless, the payment gurus see mobile payments as a significant opportunity. Let’s see what the industry leaders assembled at The Prepaid Press Expo 2008 at Caesars Palace had to say about the payments industry and what to watch for in the future. Big Banks Look at Prepaid A view of prepaid from the banking perspective was provided by Steve Karp, Senior VP, Enterprise Payments Strategy, SunTrust Bank. One of the top 10 retail and commercial banks, SunTrust has taken an interest in prepaid because it meets the needs of its customers, and enables the bank to make money while maintaining competitive parity. Payroll cards are seen as a very strategic product, particularly in the Southeast, where SunTrust operates. Karp estimated the total prepaid card market at $100 billion in 2006, with a forecasted growth rate in excess of 20%. “The big question for us was, ‘where do we go from here?’” asked Karp. After looking at their current prepaid product set of non-reloadable gift and commercial incentive cards and reloadable payroll cards, SunTrust is introducing two new reloadable products. “We feel like the big gap in our product suite, and where a lot of our peers are focusing, is to get out into the market with the right set of commercial and treasury products that can leverage the sales force we have today.” SunTrust is developing its new products with strong customer demand and will fit with broader corporate strategies. Prepaid Optimization Jim Contardi, SVP, Global Sales and Delivery, First Data, stressed the need for optimization. “My background is a technology background,” said Contardi. “When I think about technology applications in any kind of a business situation, I think about optimization. How do you get the most amount of output using the least amount of input?” Contardi said that prepaid was a great vehicle for optimization because it is a highly efficient and information rich mechanism for monetizing transactions. “If you take a look at any type of transaction that is complicated or the form of payment makes it onerous for the consumer, that is going to be a target for prepaid,” added Contardi. He said this applies to business transactions as well as consumer transactions. Retail Perspective The retail viewpoint was offered by Teri Llach, Group VP of Blackhawk Network, who focuses on packaging prepaid applications for deployment in multiple retail locations. Llach said that Blackhawk’s mission is to create a destination for prepaid within alternative retail environments. To accomplish this, Llach said Blackhawk wants to understand the consumer within each type of retail environment. http://www.prepaidgrapevine.com http://www.prepaidgrapevine.com

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

The Prepaid Press - September 15, 2008 ISOs Hold Key to Growth in Prepaid Industry Contents From the Publisher: The Show Goes On Regulatory Rundown: Early Fall Regulatory Beat 5 Minutes With Brian Rudolph, Co-owner, Krush Communications TPPEXPO’08 Spotlight Dateline Expo: Prepaid Wireless Update 2008 Wireless in Brief MetroPCS Available at Best Buy Western Capital Resources Inc. to Acquire PQH, Inc. TracFone Launches SafeLink Wireless Prepaid Wireless Roundup CIT Secures Financing for Prepaid Wireless Company MetroPCS Premiers Loopt Social-Mapping Services Virgin Mobile USA Reports Financial Results Dateline Expo: Prepaid Calling Card Update 2008 Inc. 5000 Recognizes Viscom International USAC’s “Carrier’s Carrier” Rule Comes Under Attack NetIQ Extends VoIP Management to Microsoft Office Transverse Launches OSS/BSS Open Source Platform Calling Cards in Brief Dateline Expo: Prepaid and Alternative Payments Update 2008 NETELLER and TransSend to Offer Cards Payments in Brief U.S. Treasury Introducing Direct Express Debit Card Visa Launches New Mobile Payment Services SCX Global Acquired by Rev Worldwide Metavante Selected by Corporate Network eCom ACE and NetSpend Launch March of Dimes Card AccuPOS Announces AccuCount Software Springbok Offers Private Label Prepaid Cards Prepaid 101: ATMs and Prepaid NACS Releases State of the Industry Report PaySpot to Distribute Futura Cards Hypercom Lands Element Payment Services Retail Focus in Brief Our Advertisers Contact Us

The Prepaid Press - September 15, 2008

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