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Prepaid card industry stakeholders believe the recession will have a negative impact on private-label prepaid cards but will benefit network-branded cards, according to a report by Aite Group LLC. The Boston-based research and advisory firm interviewed 21 prepaid companies earlier this month at the Prepaid Card Expo in Orlando. The report revealed respondents tied to private-label cards and network-branded cards did not show favoritism to either sector, according to Gwenn Bézard, Aite's research director and author of the report. In some of the interviews, Aite spoke with two to three executives from one company. The majority of respondents, 82%, view the impact of the recession as "somewhat negative" to "very negative" on private-label prepaid cards, which mostly are merchant closed-loop cards. Most respondents agree consumers are leery of loading funds into a closed-loop card account as more merchants file for bankruptcy protection. The majority of respondents, 71%, see the recession having a "somewhat positive" to "very positive" impact on branded prepaid cards. Asked about the biggest challenge facing the prepaid card industry, 65% responded either product awareness, education or demand cultivation. The report says "a recurring theme is card networks not doing enough to promote prepaid cards, in particular in their TV commercials, which highlight credit and debit." Asked about technology's impact on prepaid cards, 60% of respondents believe mobile phones are promising because they will give cardholders the ability to check their balances anytime.
