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Prepaid and Gift Cards in the U.S., 4th Edition

  • July 2014
  • -
  • Packaged Facts
  • -
  • 161 pages

Driven by the prospect of regulatory intervention and heightened competition, leading prepaid card marketers are beating the Consumer Financial Protection Bureau to the punch--adding protections found on debit card products, increasing fee transparency, reducing cardholder costs, and experimenting with budgeting and savings tools. As a result, industry revenue generation models are changing, placing greater emphasis on technological innovation and interchange to drive revenue growth. And in the process, it’s no longer about the card itself, as prepaid cards are morphing quickly into portals that connect cardholders to a widening range of financial services. On the heels of these and other developments, Packaged Facts conservatively forecasts general-purpose prepaid card purchase value to grow 17% in 2014. We expect closed-loop prepaid card transaction value to grow at 3.6% as this card segment face challenges related to retail distribution saturation and stagnating consumer usage.

Prepaid and Gift Cards in the U.S., 4th Edition provides industry participants with a wealth of insights to help them navigate this growing but quickly changing market. The report:
Provides a market size and forecast for the prepaid card market, including trended transaction volume for general use (open-loop) and private label (closed-loop) prepaid cards; trended purchase value, purchase volume and interchange revenue generated by general use prepaid cards; plus a separate market size for gift cards.
Explores a variety of prepaid card industry challenges and solutions, including revenue generation trend adaption, customer relationship building, and customer differentiation.
Drawing from proprietary survey results, the report identifies and interprets key prepaid metrics, including cardholder usage costs, monthly spend, monthly purchase, ATM withdrawal, and reload transactions, length of use and intended length of use.
Identifies the percentage of prepaid cardholders with direct deposit, and then assess the degree that direct deposit influences these above metrics.
Gauges credit card, debit card, prepaid card and gift card usage trends during 2010, 2011, 2012, 2013 and 2014 by demographic, breaking prepaid card usage down by major association/brand. We also study prepaid, debit and credit card cross-usage trends over time.
Assesses the relationship between prepaid, debit and credit card usage and consumer loan type usage; and the relationship between prepaid, debit and credit card usage and checking/savings account ownership. In each case, we analyze trends over time, from 2010 to 2014.
Drawing from proprietary survey results, crafts a gift card market size segmented by gift giving occasion and recipient, providing for gift dollar value estimates for occasion and for recipient, as well as for recipients by occasion and for occasion by recipient. Drawing from the Simmons National Consumer Survey, the report also includes a market size for gift card purchases by retail segment for 2010-2014, with demographic analysis.
Via proprietary survey analysis, the report identifies reloadable prepaid card brands that consumers use and use most, by prepaid card user demographic; and assesses relative penetration of bank- and nonbank prepaid cards.
Provides in-depth analysis of several of the industry’s leading card brands, including cost, feature, and target audience analysis. Brands include Chase Liquid, Contour, Bluebird, the Walmart MoneyCard, PayPal Prepaid MasterCard, Walgreens Balance Financial Prepaid MasterCard and Western Union MoneyWise
Explores prepaid card marketer & issuer strategies, focusing on card associations (American Express, MasterCard and Visa), marketers (Green Dot, NetSpend and Blackhawk Network) and issuers (the Bancorp Bank and MetaBank). Analysis includes competitive positioning, new product introductions, company innovations, and trended performance analysis.

Table Of Contents

Prepaid and Gift Cards in the U.S., 4th Edition
Chapter 1: Executive Summary
Report Scope
Report Summary
Market size and forecast
Challenges and opportunities
Prepaid card cost, usage method and spend analysis
Direct deposit influence on card behavior
Demographic analysis
Payment instrument usage and cross-usage trends
Credit cards, debit card and prepaid cards
Gift cards
Prepaid card users: financial institution relationship trends
Prepaid, debit and credit cards: usage trends by consumer loan type
Prepaid, debit and credit cards: usage trends by checking/savings account ownership
Prepaid, debit and credit cards: usage trends by banked status
Prepaid card users and mobile payments
Consumer gift card purchasing trends
Gift card occasion and recipient analysis
Gift card retailer segmentation analysis
Top prepaid card brands
Prepaid card brand analysis
Prepaid card marketer and issuer strategies
Card association strategies
Marketer strategies
Bank issuers
Chapter 2: Introduction and Overview
Introduction
Origins
Segmentation
Fees
Advantages
Drawbacks
Protection
Other terms
Competitive landscape
Competitive factors
Chapter 3: Market Size and Forecast
U.S. prepaid card market size and forecast
Table 3-1: U.S. Prepaid Card Market Size and Forecast, 2009-2016
General-purpose “open-loop” prepaid cards
Table 3-2: U.S. Open-Loop Prepaid Card Purchase Value and Purchase Volume and Interchange, 2009-2016; PIN and Signature Value and Volume, 2013
Private label “closed-loop” prepaid cards
Table 3-3: U.S. Closed-Loop Prepaid Card Transaction Volume, 2009-2016; EBT and Other Prepaid Card Value, 2013
Additional context
Government prepaid card volume, transaction and fee analysis
Widening scope of distribution
Prepaid cards disperse 13% of government funds
Revenue and fee generation
Cash rules
Direct Express
A great deal for users
Table 3-4: Direct Express Prepaid Debit Card Fee Analysis, 2013
But government prepaid programs losing luster
Employer payroll cards
Fee concerns and forced acceptance
Followed by a warning
Gift cards
Table 3-5: Dollar Value and Dollar Share of U.S. Gift Cards Given in Past 12 Months, by Gifting Occasion, 2014
Chapter 4: Challenges and Opportunities
Increasing competition and regulatory onus usher in a new age
Major financial institutions help usher in a new age
What's the fuss?
In practice: Chase Liquid
Simplicity, low cost and transparency
Graph 4-1: Chase Liquid: Common Costs, 2014
Reshaping revenue generation models
Technological innovation breeds added value—and added revenue
Interchange gaining in importance
Increase transaction volume, please
Bring on the deposits
Fighting over direct deposit
Short life spans
Direct deposit makes a huge difference
It's not about the card, it's about the ecosystem
Breadth of features
Mobile or bust
Help me save!
How big is your reload network?
Well, how fast is your reload network?
Not a one-size-fits-all market
Segmenting customers
Tiered pricing and features targeting specific groups, to drive usage and retention
Customer service
Rewards are here, rewards are here!
Loyalty rewards
Product discounts to incent trail
A new way to advertise
Serve: hero and educator
Tussling with cash and check
Electronic in, but cash out
Chapter 5: Prepaid Card Cost, Usage Method and Spend Analysis
Summary analysis
Direct deposit influence on card behavior
Monthly costs and usage
Table 5-1: Average Monthly Prepaid Card Costs; Length of Use and Intended Use; Times Used for Purchase, Withdrawal and Reload; and Spend, by Gender, Age and HH Income, 2014
Presence of direct deposit
Table 5-2: Share of Prepaid Card Users Linking Card to Direct Deposit and Length of Time Having Direct Deposit, by Gender, Age and HH Income, 2014
Direct deposit: influence on card costs and usage
Table 5-3: Average Monthly Prepaid Card Costs; Length of Use and Intended Use; Times Used for Purchase, Withdrawal and Reload; and Spend: Direct Deposit vs. No Direct Deposit, 2014
Chapter 6: Payment Instrument Usage and Cross-Usage Trends
Summary analysis
Credit, debit, prepaid and gift card usage trends
Prepaid usage penetration growth rate tapers
Visa prepaid brand predominates
Gift card penetration declines
Table 6-1: Consumer Payment Card Usage Trending, by Card Type, 2010-2014
2010-2014 demographic trends: age and HH income
Table 6-2: Consumer Payment Card Usage Trending: by Age and HH Income, by Card Type, 2010 vs. 2014
2010-2014 demographic trends: gender and race/ethnicity
Table 6-3: Consumer Payment Card Usage Trending: by Gender and Race/Ethnicity, by Card Type, 2010 vs. 2014
Prepaid users: debit and credit cards in wallet
2010-2014 trends
Prepaid but not credit card transactors
Prepaid but not debit card transactors
Table 6-4: Debit Card and Credit Card Mix among Prepaid Users, 2010-2014
Credit card and debit card users: prepaid cards in wallet
Only minor percentage of debit card and credit card holders use prepaid cards
Non-card users decline
Table 6-5: Prepaid, Debit and Credit Card Mix among Debit and Credit Card Users, 2010-2014
Chapter 7: Prepaid Card Users: Financial Institution Relationship Trends
Summary analysis
The consumer banking relationship
Checking on the decline
Table 7-1: Consumer Banking and Loan Product Penetration, 2010-2014
Consumer loan ownership: correlation to credit, debit and prepaid usage
Table 7-2: Consumer Loan Products Types: Usage, by Prepaid, Debit and Credit Card Usage, 2012 vs. 2014
Digging deeper into card mix
Table 7-3: Consumer Loan Product Types: Usage, by Prepaid, Debit and Credit Card Usage Mix, 2012 vs. 2014
Checking account ownership: correlation to credit, debit and prepaid usage
Table 7-4: Checking Account Users/Non-Users and Consumer Banking Product Non-Users, by Prepaid, Debit and Credit Card Usage, 2012 vs. 2014
Card mix makes a big difference
2012-2014 trends suggest that more prepaid users relying less on other card types
Table 7-5: Checking Account Users/Non-Users and Consumer Banking Product Non-Users, by Prepaid, Debit and Credit Card Usage Mix, 2012 vs. 2014
Prepaid and banked status
Table 7-6: Prepaid Card Usage Penetration: Unbanked, Alternative Financial Services Users, Underbanked, Banked and Fully Banked, 2014
Chapter 8: Prepaid Card Users and Mobile Payments
Summary analysis
Smartphone usage trends
Who's got a smartphone?
Table 8-1: Percent of U.S. Adults Owning Mobile Phones and Smartphones, w/ Smartphone Share, by Demographic, 2012-2013
Unbanked and AFS users are smartphone enabled
Table 8-2: Percent of Adults That Have Mobile Phone and Smartphone: Unbanked, Alternative Financial Services Users, Underbanked, Banked and Fully Banked, 2014
Prepaid users driving mobile payments
Table 8-3: Mobile Payment in Last 12 Months and Monthly Payment Frequency: Prepaid Card Users vs. Non-Users, 2014
Driving mobile P2P and bill payment
Table 8-4: Mobile Payment Methods Used in Past 12 Months: Prepaid Card Users vs. Non-Users, 2014
As well as mobile POS payments
Table 8-5: Mobile Phone Usage at Point-of-Sale in Last 12 Months, by Payment Method: Prepaid Card Users vs. Non-Users, 2014
And internet payment methods
Table 8-6: PayPal Payments and P2P Methods Used in Last 12 Months: Prepaid Card Users vs. Non-Users, 2014
Chapter 9: Consumer Gift Card Purchasing Trends
Summary analysis
Gift card occasion and recipient analysis
Gift card retailer segmentation analysis
Gift card giving in the past 12 months, by occasion and recipient
Top occasions, by dollar value
Table 9-1: Dollar Value and Dollar Share of U.S. Gift Cards Given in Past 12 Months, by Gifting Occasion, 2014
Top recipients, by dollar value
Table 9-2: Dollar Value and Dollar Share of U.S. Gift Cards Given in Past 12 Months, by Gifting Recipient, 2014
Gift card occasion and recipient dollar value matrix
Table 9-3: Dollar Value and Dollar Share of U.S. Gift Cards Given in Past 12 Months, by Gifting
Occasion and Recipient, 2014
Retailer segmentation analysis
Gift card purchases in past 12 months, by category: 2010-2014
Table 9-4: U.S. Adult Gift Card Purchases: Percent Purchasing, by Retail Segment and Card Brand, 2010-2014
Gift card dollar value purchase share, by category: 2010-2014
Table 9-5: U.S. Adult Gift Card Purchases: Dollar Value, by Retail Segment and Card Brand, 2010-2014
Gift card dollar value purchases per person, by category: 2010-2014
Table 9-6: U.S. Adult Gift Card Purchases: Dollar Spent per Purchaser, by Retail Segment and Card Brand, 2010-2014, 2010-2014
Gift card purchases, by demographic
Table 9-7: U.S. Adult Gift Card Purchases in Last 12 Months: Percent Purchasing, by Retail Segment and Card Brand, by Gender, Age and HH Income, 2010-2014
Card purchase spend, by demographic
Table 9-8: U.S. Adult Gift Card Purchases: Percent Purchasing by Dollar Value, by Retail Segment and Card Brand, by Gender, Age and HH Income, 2010-2014
Chapter 10: Top Prepaid Card Brands
Prepaid cards used and used most
Banks and American Express make inroads but non-banks still dominate
Table 10-1: Bank, Non-Bank and American Express Prepaid Cards: Have, Use Most and Used in Past 30 Days, by Generation and HH Income, 2014
Demographic analysis
Table 10-2: Bank, Non-Bank and American Express Prepaid Cards: Have, Use Most and Used in Past 30 Days, by Generation and HH Income, Indexed, 2014
Prepaid card brands used and used most
Walmart MoneyCard on top
Table 10-3: Prepaid Card Brands Used and Used Most, 2014
Demographic analysis
Table 10-4: Prepaid Cards Used: Bank, Non-Bank and American Express; Prepaid Card Brand, by Generation and HH Income, 2014
Table 10-5: Prepaid Cards Used: Bank, Non-Bank and American Express; Prepaid Card Brand, by Generation and HH Income, Indexed, 2014
Categories and brands used most
Table 10-6: Prepaid Card Brands Used Most, by Generation and HH Income, 2014
Table 10-7: Prepaid Card Brands Used Most, by Generation and HH Income, Indexed, 2014
Prepaid card brand analysis
Chase Liquid
Target audience
Table 10-8: Chase Liquid: Percent of Adults Who Used in Last 12 Months and Used Most in Last 12 Months, by Age and HH Income, 2014
Table 10-9: Chase Liquid: Network, Loading and Withdrawal Options, Features and Benefits, and Costs, 2014
Contour
A bit like Chase Liquid and bit different, too
Table 10-10: U.S. Bank Contour: Network, Loading and Withdrawal Options, Features and Benefits, and Costs, 2014
Bluebird
Helping to set the bar
Graph 10-1: “Say hello to Bluebird” Marketing Graphic, 2013
Features
Targeting the “alternative-to-banking category”
The addressable alternative-to-banking market
Table 10-11: Bluebird by American Express: Features, Costs and Network Identification, 2014
Walmart MoneyCard
Differentiator: segmentation
Complementing the MoneyCenter
Table 10-12: Walmart MoneyCard Basic, Plus and Preferred: Fund Loading and Withdrawal, Features and Benefits and Networks, Options and Costs, 2014
PayPal Prepaid MasterCard
Table 10-13: PayPal Prepaid MasterCard: Features, Costs and Network Identification, 2014
Differentiator: Savings, rewards, and the PayPal mobile payments ecosystem
Table 10-14: PayPal Prepaid MasterCard: Effect of Saving Program on Monthly Card Costs, 2014
Access, access, access … and maybe some credit, too
Walgreens Balance Financial Prepaid MasterCard
Relatively low-cost structure
Table 10-15: Walgreens Balance Financial Prepaid MasterCard: Features, Costs and Network Identification, 2014
Differentiator: loyalty rewards
Table 10-16: Walgreens Balance Financial Prepaid MasterCard: Effects of Rewards on Cardholder Costs, by Cost and Spend Scenario, 2014
Western Union MoneyWise
Table 10-17: Western Union MoneyWise Prepaid Card Fees, 2013
Chapter 11: Prepaid Card Marketer and Issuer Strategies
Card association strategies
American Express
Enter prepaid
Giving them a new home
Current products
Enhancing the consumer value proposition
Traditional and new distribution channels to bring scale
Prepaid favorable economics
But does discount fee freedom give American Express unfair advantage?
The Serve platform
Can you say ISIS?
Customer growth on a tear
$6 billion loaded during 2014? No problem.
Graph 11-1: American Express Enterprise Growth Group Quarterly Customer Growth: 2011-2013
Demographics
Strong customer retention potential
Upgrade opportunity a marketing masterstroke
MasterCard
Targeted categories
Program management services
Prepaid card brands
Table 11-1: MasterCard Prepaid Card Brand Names, Program Managers and Issuers, 2014
And a growing reload network
Key prepaid relationships and developments
Walmart and Green Dot relationship
HandR Block prepaid program
Table 11-2: HandR Block Prepaid Emerald MasterCard: Service Charge and Interchange Revenue, 2011-2013
Western Union relationship
MoneyWise and My WU
Visa
Visa DPS
Prepaid card brands
Table 11-3: Visa Prepaid Card Brand Names, Program Managers and Issuers, 2014
Visa ReadyLink
Table 11-4: Visa ReadyLink Locations, 2014
Marketer strategies
Green Dot
Competitive positioning
Targeting low- to mid-income consumers across banking relationship spectrum
Prepaid products and services
Green Dot-branded prepaid cards
Co-branded prepaid cards
Reload services
Green Dot Bank
Retail distribution model
Table 11-5: Green Dot Retail Distribution, 2013
Reload services
Reload at the Register supplanting MoneyPak
Major relationships and initiatives
Walmart
Walmart MoneyCard
Table 11-6: Walmart and Other Retailer Share of Green Dot Revenue, 2010-2013
Table 11-7: Green Dot Prepaid Card Brand Names, Issuer/Program Manager and Card Associations, 2014
Key card trends
Table 11-8: Green Dot Prepaid Card Trends: Cards, Activated, Active Cards, Reloads, Gross Dollar
Volume and Purchase Volume, with Per-Card Analysis, 2009-2013
Direct deposit as cardholder retention strategy
Table 11-9: Green Dot Prepaid Card Trends: Direct Deposit, Reloaders and Non-Reloaders; Per-Card
Revenue, Purchase Volume, Reloads and GDV, Q2 2012 vs. Q2 2013
Performance summary
Table 11-10: Green Dot Revenue: Card, Cash Transfer and Interchange, 2010-2013
NetSpend Corporation
Products and services
Target audience
Growth strategy
Distribution channel
Traditional retail and direct channels gaining ground
Table 11-11: NetSpend Revenue Share by Distribution Channel: Q4 2011 vs. Q1 2014; Merchant,
Reload and Check-Cashing Locations, Q1 2014
Card brands
Table 11-12: NetSpend Prepaid Card Brand Names, Issuer/Program Manager and Card Associations, 2014
Major client relationships
Issuing bank relationships
Direct deposit success on heels of strong card growth
Table 11-13: NetSpend Prepaid Card Cardholder Analysis: Direct Deposit vs. Non-Direct Deposit, 2011
20% rise in GDV puts NetSpend over $17 billion
Interchange share of revenue creeps up, suggesting major change
Table 11-14: NetSpend Prepaid Card Revenue, Active Cards, Gross Dollar Volume, with Direct
Deposit Metrics, 2007-2013
Blackhawk Network, Inc.
Distribution network
Gift Card Mall provides the foundation
Product range
Going mobile
Table 11-15: Blackhawk Network Products and Brand Partners, by Product Category, Product Category Revenue Share, and Sub-Category, 2013
Bank partners
Performance trends
Table 11-16: Blackhawk Network Products and Brand Partners, by Product Category and Sub-Category, 2013
Table 11-17: Blackhawk Network Products and Brand Partners, by Product Category and Sub-Category, 2013
Bank issuers
The Bancorp Bank
Card programs
Going international
Performance trends
Table 11-18: The Bancorp Inc. Prepaid Active Cards, GDV, Revenue by Type, Assets, and Deposits by Type, 2009-2013
MetaBank
Meta Payment Systems
Card programs
Table 11-19: Meta Financial Group: Assets; Total and Payments Loans, Deposits and Revenue; Prepaid GDV, by Card Type, 2009-2013
Other players
Achieve Financial Services
Advent Financial Service
BofI Holding, Inc
PreCash Inc.
Appendix
Methodology
Consumer survey methodology
Market size methodology
Sources
Report table interpretation
Color coding
Indexing
Terms and definitions
Unbanked, underbanked and related definitions

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