Consumers smitten with prepaid, small businesses can benefit

American consumers are big fans of prepaid cards. Data just released by Mercator Advisory Group reveals that half of U.S. consumers are buying retailer gift cards. What’s more, sales of all types of prepaid cards – reloadable general purpose prepaid cards, prepaid transit cards and mobile phone cards have grown by more than 100 percent since 2013.

Separately, results of a study by Fiserv suggests small businesses can be big beneficiaries of consumer gift card purchases. In fact, 74 percent of consumers surveyed said they regularly buy gift cards from small businesses, particularly casual dining restaurants, coffee shops and specialty stores (such as nail salons and barber shops).

Nearly four out of five consumers surveyed by Fiserv said they’d visit a small business to redeem a gift card with as little as 88 cents in value. And 90 percent said if they received a gift card for a small business they had not shopped at, they’d redeem the card and return to shop there again.

“Small business owners have a tremendous opportunity to boost revenue, foster customer loyalty, and strengthen their brand by investing in gift card programs,” said Dom Morea, senior vice president, prepaid solutions at Fiserv. “Gift cards are not only a potential growth engine for small business owners, they have become increasingly popular among consumers.”

The 2019 Small Business Gift Card Study, fielded this spring by First Data Corp., which has since been acquired by Fiserv, queried 1,084 consumers and 628 small businesses. Surveyed small business owners are keen on gift card programs, with nearly six out of 10 indicating the cost savings over paper gift certificates were a big plus, as were opportunities to build loyalty and grow sales. But they also want simplicity, and to that end, 60 percent indicated they prefer gift card programs that integrate with their POS systems, the survey found.

Strong growth for all types of prepaid

The Mercator data comes from a bi-annual survey series and was included in a new report, Prepaid Cards: Continued Growth that gauged usage of all types of prepaid cards. The data revealed 130 percent growth in prepaid transit cards since 2013. Also since 2013, prepaid phone cards have registered 118 percent growth, and general purpose reloadable prepaid cards have grown 100 percent.

Like many new products and services, prepaid cards are especially favored by younger consumers. Roughly seven in 10 consumers under the age of 45 are buying prepaid cards, compared to just five in 10 consumers over the age of 45, according to Mercator’s data.

Peter Reville, director of primary data services at Mercator and author of the report, noted that there is also a growing trend among consumers to purchase prepaid cards for their own use rather than for gifts to others.

“Americans are finding more and more uses for prepaid cards in their lives as evidenced by the growth of different prepaid card categories revealed by the survey,” Reville said. “Prepaid companies need to focus on the different use cases both for buying and funding as well as redeeming to keep up with the evolving use of these cards.”

Whether you want to upgrade your POS offerings, find a payment gateway partner, bone up on fintech regs or PCI requirements, find an upcoming trade show, read about faster payments, or discover the latest innovations in merchant acquiring, The Green Sheet is the resource for you. Since 1983, we've helped empower and connect payments professionals, starting with the merchant level salespeople who bring tailored payment acceptance and digital commerce tools, along with a host of other business services to merchants across the globe. The Green Sheet Inc. is also a proud affiliate of Bankcard Life, a premier community that provides industry-leading training and resources for payment professionals.

Notice to readers: These are archived articles. Contact information, links and other details may be out of date. We regret any inconvenience.