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02/03/2010 -
The increasing popularity of prepaid cards has led to an upward revision of MasterCard and Visa's performance forecast, the Associated Press reported Tuesday. David Long, an analyst with William Blair & Co., raised his profit estimates for Visa and MasterCard for 2010 and 2011, based on the increasing consumer use of prepaid cards.
"We believe Visa and MasterCard are the prime beneficiaries of the rapid growth in prepaid use, as prepaid growth is contributing to the increase in card use over paper forms of payment (cash and checks)," Long wrote in a note to investors, according to the AP.
Long said American Express, Discover, Western Union and Capital One will also see profit growth from this trend, but to a lesser extent.
The AP also noted that analysts expect the prepaid market to grow 22 percent annually for the next three years, with total dollars loaded forecasted to increase from US$291 billion in 2009 to US$526 billion in 2012.
Visa and MasterCard are expected to soon introduce debit card offerings to the Canadian payment processing market, and Visa has already released various Canadian co-branded prepaid offerings - many in honor of the 2010 Winter Olympic Games in Vancouver.
Businesses are encouraged to add prepaid card acceptance to their merchant services, to ensure they also benefit from this trend.
