Prepaid card companies are developing rewards programs that let their cobrand partners build relationships with consumers who use their products.

The strategy is catching on initially with video game developers.

Electronic Arts Inc. announced this month the prepaid EA Sports DebitSmart Visa card, which features a rewards system that lets users redeem points for some of its video games.

The Redwood City, Calif., game company joins Capcom Entertainment Inc., which introduced its own Visa-branded prepaid rewards card in North America this year.

These products show the evolving opportunities offered by cobranded, open-loop prepaid cards, according to Paul Tomasofsky, the president of Two Sparrows Consulting in Montvale, N.J. "We're just scratching the surface of how prepaid cards can be used in this way," he said.

EA Sports DebitSmart cardholders get rewards points when they make purchases at participating retailers, including Macy's Inc. and Netflix Inc.

The number of points varies by retailer, but it typically ranges from 1 to 10 for every dollar spent, according to Randy Chase, a product manager at Electronic Arts' EA Sports unit.

Cardholders can redeem the points for video games, exchanging 6,500 points for titles that work with Microsoft Corp.'s Xbox 360 or Sony Corp.'s PlayStation 3 consoles or 5,500 points for a Nintendo Co. Ltd. Wii game.

"This is a perfect way for gamers to further their relationship with EA Sports and also add to their EA Sports library by doing what they would normally do, and that's make everyday purchases," said Chase.

He said that EA Sports was already developing a prepaid card program when Capcom announced its card. "With how things are [expanding] in the debit and prepaid market, this is a good time" for gaming companies to move into prepaid cards, he said.

EA Sports wanted a way to give back to customers, Chase said, and the prepaid rewards card made the most sense.

"Our fans can put EA Sports in their wallet, and it expresses their love for the brand," he said. "It also gives us a way to stay connected with our consumers by supplying them with offers and extending partner incentives."

Consumers can sign up at at no charge, and the card is sent by mail.

Cardholders can load their accounts using cash, debit or credit cards at Western Union Co. walk-in sites or at stores that offer reload services for Green Dot Corp.'s prepaid cards. They can also transfer funds electronically from a bank account or arrange for the cards to be funded through direct deposit.

Meta Financial Group Inc.'s MetaBank unit issues the cards, and i2c Inc. processes the transactions.

MetaBank charges cardholders a monthly $1.99 service fee, 50 cents for each cash-back transaction at the point of sale and $1 for withdrawals at automated teller machines. Online purchases and standard, signature-debit transactions are free.

StorValue Card Solutions LLC, which helped develop the card's reward system, was trying to emulate systems like those offered with credit cards, according to Thomas Borzilleri, the Coconut Creek, Fla., company's chief executive.

"We are striving to expand on a platform, which the credit card industry established many years ago," Borzilleri said.

The EA Sports DebitSmart card targets a demographic that soon may have difficulty securing a credit card, according to StorValue. A part of the Credit Card Accountability, Responsibility and Disclosure Act that takes effect in February requires people younger than 21 either to have a cosigner older than 21 or to prove they can handle the debt themselves.

"This particular product is going to give [that demographic] the opportunity to earn rewards they otherwise could be missing out on" from credit cards, Borzilleri said.

Both Borzilleri and Chase stressed that cardholders can earn rewards by using the cards for regular activities. "We have partnered with merchants that are relative to the everyday spending habits of consumers," Borzilleri said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.