Private-label prepaid cards are losing their luster because of the recession, according to an Aite Group research note based on a survey of 21 card industry executives. Eighty-two percent of those participating say current economic conditions are have a “somewhat to very adverse” impact on the sale of private-label cards, as expanding retailer bankruptcies stoke consumer fears they could be stuck holding worthless and unredeemable gift and other prepaid cards from defunct chain stores.
Branded cards—primarily those prepaid products carrying a Visa or MasterCard logo— are less impacted, as 71 percent of card execs still feel positive on their outlook. But there is “no clear pattern emerging” on internal corporate incentive cards, according to Aite. Sixty-five percent of the executives feel a challenge remains in cultivating education, awareness and demand among consumer end-users and businesses that issue the items. Concerns about regulations (25 percent), and profitability/crowded value chain (15 percent) also registered with card industry officials.