Mercator: Change Endangers Profits In Prepaid Cards

Changes to prepaid cards reduce profits for program managers, according to a report released last week by the Mercator Advisory Group Inc., a Waltham, Mass-based consultancy. Each change affects many parts, such as telephone call centers and terms-and-conditions agreements, says Tim Sloane, director of Mercator's debit advisory service. The changes cost money, Sloane says. David Fish, Mercator senior analyst, tells CardLine the report does not oppose change. Instead, it lays out for card managers issues they should consider before making changes, he says. Managers of small prepaid initiatives will find changes have a relatively high cost because they have fewer cards to spread the expense than do managers of larger programs, Fish says. "One of the lessons of this industry is to always keep scale in mind," Fish tells CardLine.