Industry News

28/12/2009 - Thanks to the growing popularity of prepaid cards, the sector has expanded to include seven major distribution channels, which can be utilized by retailers to support their prepaid and gift card sales, said a recent report.

According to payment processing industry research and advisory firm Mercator Advisory Group, the seven channels for distribution are as follows: directly to consumers in-store, directly to consumers via the company's website, to businesses for use in incentive programs through direct sales, to businesses through the company's website, to non-competitive retail partners such as banks for distribution, to third-party prepaid mall distribution partners, and to prepaid web aggregators.

The prepaid mall, in which multiple brands of gift and prepaid cards are displayed for sale to consumers, has emerged as one of the most successful distribution channels, one that Mercator expects will continue to grow in market share.

Businesses whose merchant services include prepaid payment processing are encouraged to explore these different distribution channels, said Mercator.

"A major prepaid card issuer and/or retail sponsor has the opportunity to adjust the mix of channels used, and resources devoted to each one," said Ken Paterson, vice president for research operations at Mercator Advisory Group.

Prepaid cards in general are gaining a larger foothold in the overall payment processing industry, the Wall Street Journal recently reported, thanks in part to the recessionary focus on better financial management.