Editor's Note: SellingPrepaid is excerpted from SellingPrepaid E-Magazine, which can be found at SellingPrepaid.com, a Web site providing information and analysis to benefit ISOs and merchant level salespeople in the burgeoning prepaid market. If you'd like to become involved in SellingPrepaid, please e-mail greensheet@greensheet.com. For more information, visit www.sellingprepaid.com.
NEWSIn its initial white paper entitled Meeting the Challenges of Today's Prepaid Market, prepaid and credit card processing software company CoreCard Software Inc. reported on growth areas in the prepaid card industry.
Based on research culled from payments industry advisory firms TowerGroup and Mercator Advisory Group, CoreCard reported the following:
"In order for a company to take advantage of using prepaid cards, they must choose a solution that is flexible enough to fit their overall operations and marketing needs and allow them to grow in the future," said J. Leland Strange, CoreCard's Software Managing Director. "With this first white paper, we examine the marketplace and help card issuers determine the best solution for them."
CoreCard intends to publish a series of white papers on the prepaid card industry.
NovoPayment Inc., a prepaid card service provider for Latin America, released its regional forecast for general-purpose, reloadable mobile and utility cards in which it estimated a potential market of nearly $160 billion annually by 2015. The forecast is part of a regional study covering 15 countries; it measured factors such as size of labor force, poverty rates, wages and banking.
Today, the company's prepaid programs reportedly allow more than 200,000 mobile and utility consumers to pay for services on demand or via scheduled debits to their MasterCard Worldwide Maestro- or Visa Inc.-branded prepaid cards. "Unbanked consumers spend on average 10 hours per month standing in line to pay bills for services simply because they don't have a traditional bank account or credit history," said Anabel Perez, NovoPayment's Chief Executive Officer.
According to NovoPayment, the majority of mobile customers in Latin America - between 80 and 90 percent - are already on prepaid plans, representing a huge market opportunity for ISOs and a value-added solution for users who currently rely on single-use, scratch-off cards.
The Smart Payment Association completed its 2008 internal market monitoring activity to get a better understanding of the status of the smart card market and its most significant trends. Comparing 2007 data to 2008, the SPA found:
"A lot of industries were severely affected by the financial crisis," said Marie-Jane Denis, SPA's President. "High volumes continue to be shipped around the world, and a majority of regions carry on their migration to EMV standards."
ANNOUNCEMENTSPayday advance company Check Into Cash Inc. integrated a Chexar Networks Inc. risk management solution for more than 1,000 of Check Into Cash's financial services centers. Company officials said the integration is an important step in serving the more than 100 million underbanked consumers in the United States. Chexar's solution facilitates the cashing of all types of checks.
A report published by the Financial Services Centers of America indicated check cashing facilities are charging between 1.5 and 4 percent in fees for cashing payroll or government checks. This means a person cashing an $800 payroll check every two weeks pays between $240 and $768 each year in fees. However, the FSCA said check cashing fees can be avoided if they direct deposit checks onto reloadable prepaid debit cards.
Money transfer provider MoneyGram International Ltd. expanded its multicurrency payout service in Romania. The service enables customers to select euros, local lei or U.S. dollars. "Romania is an important growth market and one of MoneyGram's largest countries in terms of transactions received," said John Hempsey, Head of MoneyGram. "The expansion of multicurrency payout options better services customers sending funds from outside of the European Union."
Houston-based PreCash Inc. is offering The Vision Premier Prepaid Visa Card with direct deposit. Consumers can use the card anywhere Visa is accepted, sign up for free direct deposit, get online statements, and use e-mails and text messages to keep track of their transactions.
Convenience store chain Sheetz Inc. now offers First Data Corp.'s GO-Tag payment solution to enable its customers to make purchases at contactless readers. Sheetz will begin selling the solution at all of its 350 locations across the United States by the end of July 2009. The GO-Tag solution deployed by Sheetz is configured as an open-loop, reloadable prepaid payment sticker and can be used wherever Visa's payWave contactless system is used.
Phillipines-based Sterling Bank of Asia launched the ShopNPay Visa prepaid card, following the success of what Sterling said was the first locally issued ShopNPay Visa debit card and EMV-certified debit card in 2008. Unlike the debit card, the prepaid card is a reloadable, multipurpose, nondeposit card that can be acquired without opening a bank account. It can be used for travel, remittance, payroll, commissions and even loan proceeds.
Swapagift.com now offers its service in over 600 agent locations nationwide, giving consumers the ability to receive cash on the spot for unwanted gift cards. Swapagift estimates that $8 to $10 billion of gift cards go unused each year. "Our service benefits consumers looking to liquidate unwanted gift cards and use the cash for other purposes," said Mike Kelly, Swapagift's CEO.
Prepaid debit card solutions company TransCard LLC added Discover Financial Services Pulse Network to its ATM and debit network, which comprises more than 289,000 ATMs and POS terminals. The network is reportedly used by more than 4,500 financial institutions - including banks and credit unions - across the United States.
The Western Union Co. plans to enhance its Gold Card, the company's global consumer loyalty program, with the convenience of a reloadable Visa prepaid card. Western Union will offer the program to its 8 million Gold Card loyalty members in the United States.
PARTNERSHIPSAffiliated Computer Services Inc. signed a five-year agreement with the Illinois Department of Human Services to help the state improve distribution of payments to childcare providers and specialized personal assistants. ACS said its electronic payment card solution will help IDHS accelerate payments to recipients by using a reloadable MasterCard debit card as an alternative to paper check payments.
Security and identity theft solutions provider CyberDefender Corp. expanded its retailer marketing program from 40,000 stores to 145,000 stores globally. In conjunction with brand management services company Allianex LLC and stored-value and prepaid specialist InComm, CyberDefender introduced the My Tech Card prepaid card for use at mom-and-pop stores, as well as in the United States' big-box stores.
Alternative payment services company Rixty Inc. partnered with electronic payment systems developer Coinstar Inc. to launch a cash-based payment system at over 10,000 retail locations. The service is aimed mainly at younger unbanked customers to enable them to purchase prepaid cards.
SmartyCard, an online games service for children between 6 and 11 years old, inked a deal with Zwinky Cuties, a virtual world designed to help children explore their individuality and creativity.
SmartyCard allows parents and family members to purchase prepaid SmartyCard points for their offspring. The children can then earn this currency by playing the interactive educational games and taking the follow-up quizzes. "Zwinky Cuties provides kids with a safe and fun online environment while SmartyCard allows them to learn the value of hard work and choices," said Dae Mellencamp, General Manager for Zwinky Cuties.
TechTrex Inc. and loyalty solutions provider DigiCoins Canada Inc. implemented the Micro Payment Loyalty Project in Sudbury, Canada. The program involves the use of contactless technology to reward loyalty points to consumers.
Visa signed a multiyear agreement with Orlando, Fla.-based Urban Trust Bank, a minority-controlled, federally chartered thrift bank, to offer the Urban Trust Success prepaid debit card. The goal is to provide a low-cost alternative for consumers who face challenges in obtaining traditional bank accounts or lines of credit.
APPOINTMENTSPrepaid solutions firm VIPGift LLC promoted Patrick Gildea to Chief Financial Officer. Gildea succeeds John F. "Jack" Quigley, who is remaining with the company through 2010 as Senior Vice President of Finance.
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