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Prepaid cards offer revenue-growth opportunities to credit and debit card issuers and program managers adversely affected by lower card spending and credit limits during a bad economy, suggest the results of a recent Javelin Strategy and Research report. "Those financial institutions that aren't looking at it should take a closer look" at prepaid, Bruce Cundiff, Javelin director of payments research and consulting, tells CardLine sister publication Prepaid Trends. Issuers can find new customers among both individuals and businesses, Cundiff says. Shoppers have cut back on credit card spending and use prepaid products more often, so they could offer more revenue for issuers, Cundiff says. In addition, banks and credit unions could offer payroll cards to business customers as another possible service, he says. Still, any company looking to offer prepaid cards, whether as an issuer or a program manager, should ask the right questions of its partners, especially processors, the report says. Prepaid card providers should be sure processors can handle processing for a variety of prepaid cards, have reliable systems and be able to grow as transaction volume grows, the report says. "How is the processor going to help you grow," Cundiff says. "Think two to three years ahead, rather than "this is what I need in the here and now'" when choosing a processor, he says.
