First Data Service Helps Prepaid Card Users Buy in Bulk

Cashiers now may activate entire packs of prepaid cards at once instead of swiping each card individually, through a new service First Data Corp. is rolling out.

The Atlanta payments processor sees a need for the service among companies that buy prepaid cards in bulk to pass out at sales meetings or when parents distribute them as birthday party favors, Dan Farrell, the vice president of card products and services in First Data's prepaid solutions group, said in a recent interview. Historically, most companies and consumers have purchased prepaid cards in bulk online and waited for delivery, he said.

A single code number activates all of the cards in the pack at the point of sale, Farrell said. Packs could contain any number of cards, but the actual count would depend on what makes sense to the retailers offering them. The technology works with open- and closed-loop cards, Farrell said.

Retailers may find it easier to sell packs of 25 cards than packs of 100, Farrell said. Plus, swiping four packs of 25 cards each for a customer who wants 100 would not require a lot of extra work, he added.

Bulk activation makes sense for the business-to-business market, said Ben Jackson, a senior analyst in the prepaid advisory service at Mercator Advisory Group in Maynard, Mass.

"No one wants to stand there for half an hour to pick up cards to use as rewards at the company Christmas party," Jackson said. "You're simplifying the process for those people."

Retailers have been able to activate two or three cards at a time for a while, so simultaneous activation of a larger number of cards does not constitute "a huge step forward," Jackson said. But it does represent a "logical step," he said.

Large national retailers will likely adopt the technology first, as they are often the first to adopt new services, Farrell said. However, smaller retailers also could use it, he added.

Some retailers are testing bulk activation to see how it fits into their operations, Farrell said. The technology itself requires no additional testing, and First Data can make it available to any company that requests it, he said.

Mom-and-pop coffee shops and local children's attractions, such as trampoline parks, are among the types of local retailers that independent sales organizations might target in selling the service, Farrell said.

Bulk activation falls under the same rules as conventional activation in terms of money-laundering concerns, meaning that retailers would have to take no additional precautions, Farrell said.

The technology requires no special hardware, he added. Many POS systems already are compatible with the technology, while others would require some adjustments to accommodate it.

First Data is a unit of private-equity firm Kohlberg Kravis Roberts & Co.