While a number of emerging applications are gaining traction, others are struggling to reach viable scale. This paper argues that the rich functionality made possible in what we define as general-use prepaid cards creates a significant “cost hurdle” that must be overcome with economically viable solutions. Observing market developments, the paper identifies two emerging strategies that hold particular promise: 1) developing applications that efficiently displace high-cost legacy structures, and 2) creating financial services solutions for consumers outside the traditional banking framework. Both of these strategies rely on defining large markets to target and creating longer term relationships with cardholders.
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Discussion Paper
General-Use Prepaid Cards: The Path to Gaining Mainstream Acceptance
March 2007
DP 07-03 – Following the rapid proliferation of merchant-issued prepaid gift cards, some people assumed that the added functionality available in network-branded prepaid cards would lead to similar early success for these payment vehicles.
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