The Green Sheet Online Edition
October 10, 2009 • 09:10:02
Research Rundown
Payments industry professionals no longer rely only on traditional brick-and-mortar credit and debit card processing. Remote deposit capture (RDC) and prepaid card programs are two value-added services that help merchants gain and retain customers and reduce costs. Following is information distilled from recent payments industry reports concerning these markets:
RDC jumpin' in 2009
An October 2009 report from Celent LLC, State of Remote Deposit Capture 2009: New Markets, New Models , revealed that approximately 6,860 financial institutions have adopted new RDC solutions in the past year.
Celent also reported that:
- By the end of 2009, nearly 10,500 U.S. financial organizations - 64 percent of all institutions - will adopt RDC technology.
- Financial institutions will add over 3,600 new RDC devices in 2009.
- Another 42,000 scanners will be deployed outside of financial institutions by the end of 2009.
- Collectively, these institutions will have an estimated 463,000 capture devices, adding nearly 130,000 this year alone.
- An estimated 505,250 commercial RDC scanners will be installed by year's end, a 35 percent increase over 2008.
- Within the next three years, 95 percent of financial institutions across the United States will implement branch or teller RDC solutions.
For more information, visit www.celent.com/index.htm.
Prepaid remains strong
Mercator Advisory Group's Sixth Annual Closed Loop Prepaid Market Assessment, published in September 2009, indicates that the open- and closed-loop prepaid markets continue to grow.
A significant portion of this growth is driven by the increased adoption of open-loop network branded cards as replacements for checks. The report was based on a survey of 1,012 consumers and financial professionals.
Following are highlights from the report:
- In 2008, $187.24 billion was loaded on closed-loop prepaid instruments, an increase of 4.3 percent over the 2007 total of $179.59 billion.
- The total load for all 33 prepaid segments in 2008 (open- and closed-loop) was $247.7 billion, a $27.4 billion increase - or 12.4 percent - over the $220.3 billion loaded in 2007.
- Private-label retail cards (closed-loop) are the most commonly and frequently used. More than 45 percent of respondents surveyed use this card type to make purchases.
- Open-loop prepaid gift cards have generated more than $5 billion in sales since 2005. Since 2006, the open-loop card market has grown at a compound annual rate of 53 percent.
- In 2010, open-loop (network-branded) prepaid cards will account for more than half of the entire market, with sales projected at approximately $181.6 billion.
- Network-branded cards had $60.42 billion loaded in 2008, an increase of 48.6 percent.
- Closed-loop gift cards used for consumer incentives grew by 19.3 percent.
- Sales of gift cards through third-party distributors grew 21 percent.
- While gift giving motivates most consumer purchases, nearly one in five respondents use prepaid cards to help manage household budgets, the budgets of family members and friends.
- Distribution of Social Security benefits on prepaid instruments, now out of the pilot phase and being fully implemented, hit $1.48 billion in 2008.
- Prepaid payments for digital content (ringtones, music, gaming et cetera) grew 17 percent over 2007 to $8.04 billion. Of this, music products accounted for $4.71 billion, a 24 percent increase over 2008.
- Since Jan. 1, 2009, 87 percent of purchases of prepaid products, including gift card purchases, were made for families and friends.
- The in-store gift card market segment grew by $1.1 billion during 2008.
- Prepaid malls continue to be the bright spot in the prepaid market. Some merchants who suffered negative growth for gift card sales in-store saw significant growth when they increased the number of prepaid malls through which they sold gift cards.
- Some merchants reported that their 2008 store sales were down by as much as 30 percent, but gift card sales were only off by 6 or 7 percent.
For more information, visit their Web site at www.mercator advisorygroup.com.
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.
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