The Green Sheet Online Edition
October 10, 2009 • 09:10:02
Research Rundown
Payments industry professionals no longer rely only on traditional brick-and-mortar credit and debit card processing. Remote deposit capture (RDC) and prepaid card programs are two value-added services that help merchants gain and retain customers and reduce costs. Following is information distilled from recent payments industry reports concerning these markets:
RDC jumpin' in 2009
An October 2009 report from Celent LLC, State of Remote Deposit Capture 2009: New Markets, New Models , revealed that approximately 6,860 financial institutions have adopted new RDC solutions in the past year.
Celent also reported that:
- By the end of 2009, nearly 10,500 U.S. financial organizations - 64 percent of all institutions - will adopt RDC technology.
- Financial institutions will add over 3,600 new RDC devices in 2009.
- Another 42,000 scanners will be deployed outside of financial institutions by the end of 2009.
- Collectively, these institutions will have an estimated 463,000 capture devices, adding nearly 130,000 this year alone.
- An estimated 505,250 commercial RDC scanners will be installed by year's end, a 35 percent increase over 2008.
- Within the next three years, 95 percent of financial institutions across the United States will implement branch or teller RDC solutions.
For more information, visit www.celent.com/index.htm.
Prepaid remains strong
Mercator Advisory Group's Sixth Annual Closed Loop Prepaid Market Assessment, published in September 2009, indicates that the open- and closed-loop prepaid markets continue to grow.
A significant portion of this growth is driven by the increased adoption of open-loop network branded cards as replacements for checks. The report was based on a survey of 1,012 consumers and financial professionals.
Following are highlights from the report:
- In 2008, $187.24 billion was loaded on closed-loop prepaid instruments, an increase of 4.3 percent over the 2007 total of $179.59 billion.
- The total load for all 33 prepaid segments in 2008 (open- and closed-loop) was $247.7 billion, a $27.4 billion increase - or 12.4 percent - over the $220.3 billion loaded in 2007.
- Private-label retail cards (closed-loop) are the most commonly and frequently used. More than 45 percent of respondents surveyed use this card type to make purchases.
- Open-loop prepaid gift cards have generated more than $5 billion in sales since 2005. Since 2006, the open-loop card market has grown at a compound annual rate of 53 percent.
- In 2010, open-loop (network-branded) prepaid cards will account for more than half of the entire market, with sales projected at approximately $181.6 billion.
- Network-branded cards had $60.42 billion loaded in 2008, an increase of 48.6 percent.
- Closed-loop gift cards used for consumer incentives grew by 19.3 percent.
- Sales of gift cards through third-party distributors grew 21 percent.
- While gift giving motivates most consumer purchases, nearly one in five respondents use prepaid cards to help manage household budgets, the budgets of family members and friends.
- Distribution of Social Security benefits on prepaid instruments, now out of the pilot phase and being fully implemented, hit $1.48 billion in 2008.
- Prepaid payments for digital content (ringtones, music, gaming et cetera) grew 17 percent over 2007 to $8.04 billion. Of this, music products accounted for $4.71 billion, a 24 percent increase over 2008.
- Since Jan. 1, 2009, 87 percent of purchases of prepaid products, including gift card purchases, were made for families and friends.
- The in-store gift card market segment grew by $1.1 billion during 2008.
- Prepaid malls continue to be the bright spot in the prepaid market. Some merchants who suffered negative growth for gift card sales in-store saw significant growth when they increased the number of prepaid malls through which they sold gift cards.
- Some merchants reported that their 2008 store sales were down by as much as 30 percent, but gift card sales were only off by 6 or 7 percent.
For more information, visit their Web site at www.mercator advisorygroup.com.
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