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merchants often start rethinking their decisions," Rubin A lot of businesses ran [gift card] specials, which allowed
said. "They start to ask themselves, 'Is it really worth doing them to take in revenues, using the float to get them
all this for $10 a month in savings?'" through the pandemic and also secure future business."

While gift card programs are generally a sticky proposi- The pandemic also drove up consumer and merchant in-
tion for merchant accounts, it's not a guarantee. "It's easy terest in digital gift cards, procured and used either online
to lose an account if you're not paying attention," Rubin or with mobile apps. "This allowed merchants to engage
said. He explained that SwipeIt immediately contacts ISOs with customers while in lockdown," Niedbalski said.
and MLSs when a merchant inquires about needed inte-
gration changes, thus giving them an opportunity to fend Charting prepaid growth
off potential attrition. The company will also work with "The prepaid market has grown significantly in recent
ISOs and MLSs on ways to keep merchants on board. years," Handly said. She estimates the market is growing
at a 13 percent compound annual rate, which is expected
"ISOs and agents secure their portfolios by working close- to continue through 2023. The U.S. market, while growing
ly with gift card providers to verify their merchants are steadily, is charting a 6 percent compound annual growth
maximizing gift card opportunities," Shepherd said. rate, she added.

There is also residual income to be had. SwipeIt offers Research and Markets said the global prepaid market
gift card programs for a set monthly fee, which ISOs and topped $2 trillion in 2019 and says it's on track to total
agents are free to mark up substantially. Plus there is the $18.47 trillion by 2030. Advance Market Analytics report-
obvious boost to transaction residual splits, the bread and ed recently that North America has "a leading position in
butter of most payment processing professionals. the global market [which] is expected to remain in place
for years to come."
Niedbalski said that Fiserv has several pricing and rev-
enue options for resellers of its gift card programs. "Sev- "Growth has been relatively sustained over time in devel-
eral ISOs and agents have been making a good living by oped markets, such as North America and Europe, but in
adding closed-loop prepaid cards to their portfolios of of- Latin America and Asia we're seeing a dramatic expansion
ferings," he said. of prepaid markets brought on in part by the push towards
cashless, digital payments that is taking place throughout
Niedbalski also has advice for ISOs and MLSs looking to the world," Handly said.
add a gift card program to their portfolios. Look for scal-
ability, stability and security, he said. "If you can check The one dark cloud over the prepaid horizon is regula-
the boxes on all three of these, the business case speaks tion. "We're seeing really stringent regulations on prepaid
for itself." cards in Europe," Handly said. She pointed to a European

The COVID effect Union anti-money laundering directive that prohibits the
loading of more than 150 Euros ($177) onto any card at one
Like most things in the business and consumer realms, time.
COVID-19 has had an impact on the prepaid market. "The
COVID pandemic has introduced a number of new use In the United States, the Consumer Financial Protection
cases for prepaid cards," Handly said. She pointed to the Bureau created a controversial rule in 2019 that was in-
use of prepaid for vaccine incentives, and disbursements tended to provide prepaid cardholders with many of the
of government assistance payments. same protections that apply to other payment products
such as checking accounts and credit cards. PayPal, how-
Wisconsin's Department of Health Services was giving out ever, successfully challenged provisions of the rule, spe-
$100 Visa gift cards to residents who received vaccines this cifically dictates on how prepaid providers disclose fees.
summer. City and county governments in several states—
including California, Georgia, Kansas, New York, North "While I don't believe we've seen regulation restrain
Carolina and Texas—have offered similar prepaid card in- growth in the U.S. prepaid market yet, I think that it may
centives. Several others were handing out $100 Walmart in the future," Handley said. "It will be interesting to see if
gift cards to residents who rolled up their sleeves for COV- the U.S. places limits on total allowable loads on prepaid
ID shots. Colorado residents were among those qualifying cards [as the EU did] moving forward."
for Walmart gift cards. One Nevada county was offering
$100 Amazon gift cards to vaccine recipients.
Patti Murphy is senior editor at The Green Sheet and co-host of the
Gift card programs also helped many merchants ride out Merchant Sales Podcast. Follow her on Twitter @GS_PayMaven.
the pandemic. "Closed-loop prepaid programs have al-
ways been an integral part of many merchants' business
strategies," Niedbalski said. "Over the last 18 months it has
become integral.
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