Prepaid and Gift Cards - US - June 2010

SCOPE AND THEMES
What you need to know
Data sources
Consumer survey data
Advertising Creative
Abbreviations and terms
Abbreviations
Terms
EXECUTIVE SUMMARY
Industry overview
Industry highlights – the consumer
The recession has hit the industry hard
The un- and underbanked represent major potential
The Credit CARD Act changes the landscape
Teens and college students are an important market
Closed-loop cards are giving way to open-loop cards
Prepaid cards are for more than just shopping
INSIGHTS AND OPPORTUNITIES
Key points
Cards are benefits to unbanked and underbanked
Figure 1: Households use of prepaid cards, by banking status, December 2009
Community gift cards keep spending local
Prepaid rebate cards are growing in popularity
The teen market
INSPIRE INSIGHTS
Free Spending Teens are Back?
Credit vs. Cash
Next for the Residential Mortgage Market
MARKET SIZE AND FORECAST
Key points
Use of prepaid and gift cards is trending up
Figure 2: Combined consumer use of prepaid and/or gift cards, 2007-09 (U.S. adults in millions)
Closed-loop transactions and dollar volume
Open-loop transactions and dollar volume
Prepaid cards are increasingly popular
And continued growth is expected
Prepaid cards not yet heavily used for payments
Figure 3: Payment methods adopted*, by consumers, February 2010
Why people have prepaid cards
Figure 4: Why people have prepaid cards, 2008
Fewer people have prepaid cards, but more discard them
Figure 5: History of adoption and discarding, by payment method, 2008
Gift cards
Who uses gift cards?
Figure 6: Gift card use, by age (users in previous 90 days), March 2010
COMPETITIVE CONTEXT
Key points
Key players
Figure 7: Global transaction market share
Branded cards are preferred
Gift cards are valuable incentives
Green Dot’s new fee structure rewards repeated usage
Bank fees are helping prepaid cards compete
MARKETING CHANNELS
Key points
The parent/teen connection
Using the internet
MARKET DRIVERS
Key points
Un- and Underbanked
The recession has hurt the industry
Credit CARD Act
Teens and college students
Figure 8: Projected growth of current children/teen/young adult market, 2004-14
Cards used for other purposes will help drive market
LEADING COMPANIES
Key points
H&R Block is the leading bank issuer
Figure 9: Leading prepaid card sellers based on purchase volume, 2008
VISA is the leading card issuer – by far
Figure 10: Largest global prepaid card issuers, by market share of purchase volume, 2009
NetSpend
GreenDot
INNOVATION AND INNOVATORS
Key points
RegaloCard
Paragon Dynamix LLC
Target offers mobile gift cards
Partnering helps increase gift card usage
Personalized egift cards fill a need
ADVERTISING AND PROMOTION
Key points
 OVERVIEW
Reaching teens through their parents…and vice versa
Different messages for different segments
 EMAIL AND DIRECT MAIL ADS
Prepaid reloadable cards are the new way to manage money
Figure 11: Facecard Prepaid MasterCard email, March 2010
Figure 12: NetSpend VISA Prepaid card from MetaBank email, March 2010
Figure 13: Readydebit VISA Prepaid card from MetaBank email, March 2010
Gift card usage spurred by creative partnering
Figure 14: Discover direct mail piece, March 2010
Figure 15: TD Ameritrade/Apple gift card offer, March 2010
 VMS ADS
Alternative to a bank account
Figure 16: ICE Card – 2010
Audience targeted by celebrity
Figure 17: RushCard – 2010
Alternative to credit card
Figure 18: Green Dot Prepaid VISA – 2010
Help with staying on budget
Figure 19: Vision Premier VISA—2010
Using incentives to increase interest
Figure 20: Readycard Prepaid VISA
Figure 21: RushCard VISA—2010
THE CONSUMER
Key points
How many cards are purchased and received
Figure 22: Consumers who purchased or received gift cards in the last 12 months, by gender, March 2010
Figure 23: Consumers who purchased or received gift cards in the last 12 months, by age, March 2010
Figure 24: Consumers who purchased or received gift cards in the last 12 months, by income, March 2010
Figure 25: Consumers who purchased or received gift cards in the last 12 months, by race/ethnicity, March 2010
Where gift and prepaid cards are purchased
Figure 26: Where consumers purchased gift cards, by gender, March 2010
Figure 27: Where consumers purchased gift cards, by gender, March 2010
Why cards are purchased and received
Figure 28: Occasions for which gift or prepaid cards have been purchased, by gender, March 2010
Figure 29: Occasions for which gift or prepaid cards have been received, by gender, March 2010
Figure 30: Occasions for which gift or prepaid cards have been purchased, by income, March 2010
Figure 31: Occasions for which gift or prepaid cards have been received, by age, March 2010
Reasons for not buying cards
Figure 32: Reasons for not buying gift/prepaid cards, by age, March 2010
Figure 33: Reasons for not buying gift/prepaid cards, by race/ethnicity, March 2010
Card preference
Figure 34: Preferred type of prepaid/gift card, by gender, March 2010
Figure 35: Preferred type of prepaid/gift card, by gender, March 2010
Figure 36: Preferred type of prepaid/gift card, by income, March 2010
Figure 37: Preferred type of prepaid/gift card, by race/ethnicity, March 2010
Getting consumers to buy cards
Figure 38: Attractiveness of card features, by gender, March 2010
Figure 39: Attractiveness of card features, by age, March 2010
Figure 40: Attractiveness of card features, by income, March 2010
Using cards to pay salaries
Figure 41: Receives salary by prepaid card, by age, March 2010
Figure 42: Receives salary by prepaid card, by income, March 2010
Desire to be paid via prepaid card
Figure 43: Desire to be paid via prepaid card, March 2010
Reasons for not wanting to be paid via prepaid card
Figure 44: Reasons for not wanting to have salary loaded on a prepaid card, March 2010
Figure 45: Reasons for not wanting to have salary loaded on a prepaid card, March 2010
Inducing consumers to use a prepaid card
Figure 46: Likelihood of using a prepaid card vs. debit/credit cards, by gender, March 2010
Figure 47: Likelihood of using a prepaid card vs. debit/credit cards, by age, March 2010
Figure 48: Likelihood of using a prepaid card vs. debit/credit cards, by income, March 2010
Figure 49: Likelihood of using a prepaid card vs. debit/credit cards, by race/ethnicity, March 2010
CLUSTER ANALYSIS
Key points
Savers
Who they are
Characteristics
Opportunity
Simplistics
Demographics
Characteristics
Opportunity
Embellishers
Demographics
Characteristics
Opportunity
Cluster characteristics
Figure 50: Gift card clusters, March 2010
Figure 51: Where consumers purchased gift cards, by gift card clusters, March 2010
Figure 52: Occasions for which gift cards have been purchased, by gift card clusters, March 2010
Figure 53: Attractiveness of card features, by gift card clusters, March 2010
Cluster demographics
Figure 54: Gift card clusters, by gender, March 2010
Figure 55: Gift card clusters, by age group, March 2010
Figure 56: Gift card clusters, by income group, March 2010
Figure 57: Gift card clusters, by race/ethnicity, March 2010
Figure 58: Gift card clusters, by Hispanic origin, March 2010
Cluster methodology
APPENDIX: TRADE ASSOCIATIONS