Statements that proclaim, "the prepaid market will reach $240 Billion this year" are meaningless to anyone involved in a specific prepaid market segment because each prepaid market segment is unique. Even more meaningless are statements that "the prepaid market will approach $760 Billion in 2007" because each market segment has its own total market size and growth rate. The segments for prepaid solutions vary so greatly that any general characterization that claims to be universal must be questioned. The market for a cash card is different that those for controlled cash cards, gift cards, proxy cards, mass transit, and telecommunications. These different segments share a few characteristics other than consumers have paid in advance for a specific product or service.

This report identifies the key attributes used to evaluate all prepaid solutions and the market requirements for each segment. Any financial institutions entering a prepaid market segment that does not recognize and address these market requirements will find it difficult or impossible to keep pace with the market leaders.

The majority of prepaid solutions sold to financial institutions today claim to work across multiple market segments. These solutions are in essence a prepaid toolbox that leading financial institutions use to develop a product suitable to a specific market segment. But there is a glut of general purpose solutions available compared to the relatively small number of financial institutions that have the market penetration, brand identity, and sales and service organizations needed to succeed in creating a segment specific solution from scratch. As a result, the number of general purpose prepaid solutions will shrink and the number of segment specific solutions will grow to meet the needs of the majority of financial institutions that require help in developing the technology, creating brand awareness, and delivering marketing collateral and the service and support needed to win customers right out of the gate.

Closed solutions dominated the prepaid spending in 2003, and gift cards are the largest closed solution at $40 Billion. These Gift Card solutions benefit merchants because the preapid card or certificate is locked to that merchant's business. Research into consumer behavior indicates that the consumer has a strong preference for open prepaid solutions, but this desire is diametrically opposite the merchant's needs. In theory, an open prepaid card from a major company should be able to restrict spending based on enforcement of merchant, merchant type and even the specific item that can be purchased using item data -- this report indicates why this effort has been extremely slow to develop.

1. Introduction

2. Market Size

3. Prepaid Implementations

Segment Specific Requirements

4. The Unique Attributes of Prepaid Solutions

Acquire Customers At A Different Time & Place
Create New Distribution Options
Supports Micro Transactions
Perform Transactions Off Network
Deliver Perfect Loyalty
Provide Anonymity
Replace Paper Certificates
Reduced Chargebacks

5. Defining Closed, Open, and Closed Multi-Use

Closed
Open
Closed Multi-use

6. The Gift Card Misnomer

7. Prepaid, ATMs & Self Service

8. Distribution Of Prepaid Instruments

9. The Trouble With Prepaid

Tracking The Value of a Prepaid Card
Prepaid Meets Signature Debit
The Prepaid Lock In
Lost Property Laws
Card Limits
Patriot Act & Government Regulation

10. Conclusion.

Tables and Exhibits

Figure 1: Few prepaid transactions ride the regional and national financial networks.
Chart 2: 31 Unique Prepaid Market Segments
Chart 3: Five key attributes with marketing and support define prepaid solutions.
Figure 4: POSA enables cost effective gift card distribution
Figure 5: Distributors of Prepaid Solutions Are Evolving.

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預付市場的動向分析

Prepaid Market Dynamics

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