The total value of the branded prepaid card market in the United States is expected to surpass $440 billion by 2017, nearly quadrupling its estimated value of $120.2 billion in 2009, according to The Boston Consulting Group’s “The Prepaid Market Sizing Report.”  The report predicts that future branded prepaid growth will be driven primarily by increases in the public sector and corporate payroll segments. The healthcare and general use branded prepaid segments will also continue to see steady expansion.

U.S. Remains Branded Prepaid Segment Leader
The United States will continue to play a lead role in the expansion of prepaid around the globe. By 2017, it is projected that the United States will hold approximately 53 percent of the global branded segment, making its share more than double the next six leading markets, including India, the UK, Mexico, Italy, Middle East and Brazil. Combined, these markets will hold approximately 25 percent of the branded prepaid market. And while the U.S. will remain the branded leader, Brazil is expected to expand substantially, growing from just $1.7 billion in 2009, to more than $17 billion in 2017.

“‘The Prepaid Market Sizing Report’ provides a holistic view of the prepaid segment around the globe. It looks at the prepaid segment in 46 countries across six continents, and includes vertical-specific information for nearly 20 verticals,” said David Bronstein, partner and managing director, Boston Consulting Group. “Through this research, we found that the U.S. prepaid segment is poised for significant growth over the next several years, and that there’s an opportunity for innovative organizations to meet new segment needs with the right mix of products and solutions.”

Public and Corporate Sectors Drive U.S. Branded Growth
As the prepaid segment continues to evolve, public and corporate sectors will drive significant prepaid growth in the U.S. According to the Prepaid Market Sizing Report, the public sector will more than quadruple in overall segment value by 2017, growing from $31.7 billion in 2009 to $163 billion by 2017. The corporate sector, driven primarily by payroll, will also play a key role in branded expansion. In 2009, branded prepaid payroll was valued at $25.6 billion. By 2017, Boston Consulting Group estimates it will reach $99.6 billion.

Additional growth sectors include healthcare and general use branded prepaid. Healthcare is anticipated to grow from $15.3 billion in 2009, to more than $52 billion by 2017, while general use is anticipated to more than double, reaching nearly $50 billion by 2017.

About the Prepaid Market Sizing Report
The Prepaid Market Sizing Report was conducted by Boston Consulting Group (BCG). The study included an examination of branded, closed-loop and semi-branded prepaid product categories to evaluate segment size as of 2009, and estimate growth potential through 2017. The report analyzed data from 46 countries across six continents, and 18 verticals in each country. The Prepaid Market Sizing Report was formerly conducted in 2008 with projections for 2015 and has been updated to include information for 2009 with projections through 2017.

Visa has upgraded its Visa Business Network, an online community hosting small business owners in search of business management and customer base growth advice. 

The enhancements are set ensure a smoother virtual interaction between members and include business interactive toolkits, small business mentor programs, a question and answer forum as well as content ranking capabilities for the articles considered most useful.

Visa’s upgrading social network process has been triggered by the direct feedback received from small business owners who shared their thoughts and opinions on features and functions that would most help them set and achieve goals.

The President will sign the Dodd-Frank Wall Street Reform and Consumer Protection Act later this week. That will set the clock ticking on number of deadlines established by the financial regulation reform bill. Here are the two big ones to watch for.

The regulation of debit-card interchange is the one that is likely to have the most immediate impact on the payments business. The legislation gives the Federal Reserve Board 9 months to establish standards for assessing whether the interchange fee that an issuer charges is “reasonable and p;roportional to the cost incurred by the issurer with respect to the transaction.” It provides some guidance on this. The Fed is supposed to look at the “incremental cost” of the transaction but it can provide a boost under certain circumstances for expenditures that the issuer makes on fraud protection. While cost-based regulation may sound easy it is generally complicated and controversial.

The Fed will be collecting lots of data and sifting through many competing claims from all of the parties involved in setting these standards. At a minimum the Fed will have to go through this exercise separately for signature and PIN debit. It may also have to do this at a very refined level to the extent issuers can credibly argue that their incremental costs vary by merchants, segments and types of cards.

How the Fed chooses to implement these regulations remain to be seen. Historically, the default for interchange fees is set by the networks. The Dodd-Frank bill, however, regulates interchange fees at the bank level—for all banks that have $10 billion or more in assets. It appears that a bank with less than $10 billion of assets can have any interchange fee it wants (and since law provides that the merchant can’t discriminate against issuers it does not appear that the merchant or its acquirer can refuse these cards). Larger banks, again it appears, must have individual interchange fees that are consistent with whatever standards the Fed sets.

We have well over a century of experience with cost-based regulation. Several things are pretty predictable:

There will be long-standing controversy over how costs are calculated. Remember in this business a tenth of a basis point multiplied times volume is a lot of money. It actually matters whether the Fed standard suggests that 61 rather than 60 basis points is warranted for an issuer.

The cost-based regulations will result in increases in costs. That is why public-utility regulation moved away from cost-based pricing. If issuers get to recover their transactions costs and fraud costs they don’t have an incentive to minimize those costs anymore. There will be cost creep. The likely reductions in interchange fee revenues and caps on these rates will lead banks to make up the revenue elsewhere.

That’s the effect everyone has already talked about and acknowledged. It is just inevitable that consumers are going to be paying more for either debit-card transactions or some other part of the checking-account relationship.

The Consumer Financial Protection Board will also likely have significant consequences on payment card business and especially on credit cards. It is also the most unpredictable. Much of the specifically intrusive aspects of consumer financial protection that had been proposed—like letting the new agency design and insist on its own “plain vanilla” products—got stripped out. Now there is a vague prohibition of “abusive” practices and an agency that has a lot of discretion, but no obligation, to regulate pretty much all financial products. The CFPB will be run by a Director who is the sole decision maker. I think that is a recipe for disaster for everyone concerned. It leaves the Director completely exposed and solely responsible for every decision, and it provides few checks and balances. But in any case that’s what we have.

The President will need to nominate a Director soon and the Senate will have to approve his candidate. The manner and extent to which the new agency gets involved in the credit card market depends on lot on who becomes Director. Some of the people who the White House have suggested as possible candidates believe that credit cards have been very harmful to society and that the government should develop rules that prevent or deter people from borrowing.

Other possible candidates could take a more balanced view. The payment card industry will be joined to the hip of whoever that person is for the next five years.

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David S. Evans is an economist and a business advisor to payment companies around the world. His recent work has focused on helping companies create, ignite and profit from payments innovation. He is the originator of the Innovation Ignition Framework® , a tool provides a systematic way for companies to evaluate and implement innovative ideas and achieve critical mass.

Visa today announced the first phase of a national marketing campaign to raise consumer awareness about the benefits of using reloadable prepaid debit cards instead of cash for purchases.  The campaign is designed to reach financially underserved consumers in particular - those without a traditional banking relationship, access to a payment card or mainstream financial services, and who rely heavily on cash for everyday transactions.  According to Visa estimates, there are approximately 80 million financially underserved consumers in the U.S. alone.

The campaign brings to life how Visa prepaid debit cards can enable better money management and empower consumers looking for an alternative to a cash-and-carry lifestyle.  The fundamental messages of the campaign focus on core product values, including:

• Control - enabling consumers to manage their spending on their terms
• Convenience - the ability to make purchases online, at retailers - even to pay bills
• Security - safer than cash and registered cards are replaceable if lost or stolen
• Access - easy, timely access to their money through direct deposit

The multi-channel campaign integrates social media, mobile, digital, grassroots events, and radio advertising, as well as in-store demonstrations, displays, and promotions.  Digital media is a central element of the campaign.  Online display ads provide direct access to purchasing cards online through Visa partners, and social media enables consumers to connect as a community through the Visa Prepaid Debit Facebook page (www.Facebook.com/VisaPrepaidDebit).  In-store demonstrations and local events provide an opportunity for personal interaction with consumers, where product experts explain how reloadable prepaid cards work, and help consumers apply for a card onsite.

“Core to this campaign is Visa’s ability to reach consumers who may not realize they can enjoy the benefits of a Visa product, and experience a better alternative to a cash-and-carry lifestyle,” said Hyung Choi, head of U.S. prepaid products, Visa Inc.  “The campaign builds upon Visa’s long-standing commitment to extending financial inclusion to more consumers, while at the same time driving opportunities for Visa, our partners and clients.”

Research by the Mercator Advisory Group shows that the majority of consumers do not make full use of the opportunities provided by prepaid cards. “Our CustomerMonitor Survey Series conducted in 2009, documented the fact that only a very small number of the unbanked and underserved have purchased or reloaded a general purpose reloadable prepaid card in the last 12 months,” said Tim Sloane, director of the Prepaid Advisory Service at Mercator. “This clearly demonstrates that the industry has a significant opportunity to more strongly communicate the benefits of prepaid cards to consumers, as compared to alternatives that include cash and alternative other financial services offerings.”

For more than a decade, Visa has invested in growing the prepaid category in the U.S. and around the world.  Visa’s flexible platform enables a diverse set of prepaid products meeting highly specific needs supported by technology enhancements and services, prepaid processing and a global infrastructure that ensures interoperability and consistency.  With a focus on migrating paper-based programs and processes to electronic forms of payment, Visa has established more than 10,000 Visa prepaid programs in 110 countries, delivering greater convenience, choice and security to consumers, businesses and governments.  Access to electronic payments can help empower financially underserved individuals, providing more choice and greater control over their money and enabling their inclusion in the financial mainstream.  Additionally, Visa partners with leading consumer advocates, educators and financial institutions to encourage responsible, informed use of digital currency through its financial literacy programs.

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Banks are gearing up for a wave of new fees in an attempt to make up for lost revenue from new regulatory rules on credit cards and overdraft fees.

“We are disappointed that legislation intended to make our financial system safer and fairer for consumers includes an irresponsible and anti-consumer amendment offered by Senator Durbin. Adopted with no debate or review of facts, the amendment allows retailers’ to shift their cost for accepting debit cards onto the backs of consumers while they continue to receive the value of electronic payments – including faster check-outs, ticket lift and guaranteed payment.

“Written and backed by lobbyists representing the nation’s largest retailers, the Durbin amendment could significantly harm consumers. Consumers could have less choice, higher costs and could experience an increase in costs for checking accounts and online banking fees and reduced debit card benefits like fraud protection and rewards. Those who rely on prepaid cards for government disbursement, such as child support, could be particularly hard hit.

“For financial institutions, this amendment could force them to reduce or eliminate valuable debit and checking account services and could especially harm community banks and credit unions that depend on interchange to offer competitive banking services to firefighters, police officers, teachers, veterans, congressional staffers and other customers.

“The Durbin amendment also gives retailers the power to set arbitrary, minimum purchase requirements for consumers choosing to pay with plastic. This means that customers who want to buy a gallon of milk or loaf of bread could be forced to buy more unnecessarily if they use electronic payments at the register. This could be especially devastating for those on a fixed income who rely on prepaid cards for government disbursements such as social security.

“The Durbin amendment is not germane to the overall Financial Reform bill legislation. We hope Congress sees the amendment for what it is – an attempt by retailers to increase their profits at the expense of consumers.”

MAP is offering semi-annual trainings and workshops for its clients named the “MAP Solutions Series.” Twice-a-year MAP offers no-cost, one-day workshops for its clients focused on new products and other special program areas that clients have identified for more training. MAP continues to offer regular online training, but as Sandy Jenkins, Vice President of Training, explains, the MAP Solutions Series will offer a special opportunity for in-depth learning.

“Many times our clients need more than one- to two-hour webinars for training and evaluation, “ she said. “This is especially true when they are planning or considering new products to introduce to their card portfolio.” The MAP Solutions Series will offer clients a comprehensive overview and learning opportunity. “Also important, clients will interact and learn from each other. Credit union people are special in that respect. They are always willing to help each other and work collaboratively. “

The first MAP Solution Series Workshop is June 15, 2010 and held at the Rainier Golf and Country Club in Seattle. This No-Cost Training will feature two guest speakers, Peggy Vasquez, Visa Business Leader for Visa Data Manager, and Penny Jurss, Visa Business Leader for ATM Product Services.

In the morning session, MAP will continue to build on its successful Marketing Analytics program with the introduction of Visa Data Manager, formerly called VisaVue Online for DPS.

The afternoon session will focus on the latest advancements in ATM marketing and technology. Participants will learn about ATM Content Manger, a web-based solution designed to assist your credit union in the management of your ATMs. ATM Content Manager includes ATM Campaign Manager, Remote Electronic Journal and Operational Command. ATM Campaign Manager’s real-time management and delivery will greatly enhance your institution’s marketing campaigns. Remote Electronic Journal is a web-based application that enables back-office personnel to view financial, administrative, and status message transactions for all terminals. Also part of the session is the ATM Cash Forecasting and ATM Profitability and Asset Management. These Cash Management Services offer clients a complete audit and view of ATM cash, allowing clients the best tools for managing cost and vendors. Finally, the latest in Deposit Automation tools will be covered, including host transmissions, unique transaction, and detailed receipts printing with options to display check images and currency break outs, supporting full migration to Check 21. For more information, please contact Sandy Jenkins at 866-598-0698 x1611. To sign-up for the June 15 MAP Solution Series, please visit the MAP Training Center (http://mapacific.com/resource-center/training.html) or by contacing Karl Kaluza directly at karl.kaluza@mapacific.com.

On March 23, 2010, the Federal Reserve Board issued the final rules to implement the Gift Card provisions in the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (The CARD Act). The rules, which amend Regulation E of the Electronic Funds Transfer Act of 1978, restrict fees and expiration dates on certain types of prepaid cards and require providers to “clearly” document terms and conditions on the cards.

The MAP Prepaid general-purpose reloadable card is not considered a Gift Card when:

1. * The card is used as a substitute for a checking, savings, or deposit account;
2. * The card is used to pay for a consumer’s health-related expenses - for example, a card tied to a health savings account;
3. * Card is used as a substitute for travelers checks or cash;
4. * Card is used as a budgetary tool, for example, by teenagers, or to cover emergency expenses.

However, the rules cover general-purpose prepaid cards when the card is marketed or labeled as Gift Cards. Examples of marketed or labeled as a Gift Card include:

1. * Using the word “gift” or “present” on a card, certificate, or accompanying material, including documentation, packaging and promotional displays;
2. * Representing or suggesting that a card can be given to another person, for example, as a “token of appreciation” or a “stocking stuffer,” or displaying a congratulatory message on the card, certificate or accompanying material;
3. * Incorporating gift-giving or celebratory imagery or motifs, such as a bow, ribbon, wrapped present, candle, or congratulatory message, on a card, certificate, accompanying documentation, or promotional material.

Understanding the New Restrictions:

The term “marketed or labeled as a gift card or gift certificate” means directly or indirectly offering, advertising or otherwise suggesting the potential use of a card as a gift for another person. A general-purpose reloadable card is marketed or labeled as a gift card even if it is only occasionally marketed as a Gift Card. For example, a Visa-branded general purpose reloadable card would be marketed or labeled as a Gift Card if the credit union principally advertises the card as a less costly alternative to a checking account but promotes the card as “the perfect gift” during the holiday season.

For credit unions choosing to offer Gift Cards, there are several new rules. Gift Card rules restrict dormancy, inactivity and service fees, as well as expiration dates. Fees kick in only after cards have been inactive for one year, and then only one fee can be charged per card per month. Additionally, all cards covered under the regulations must come with at least a five-year expiration date. Among the steps that need to take place before MAP can offer a new Gift Card product to our clients:

1. * Visa Inc. will have to update their Gift Card regulations.
2. * Cards and card packaging have to be redesigned and then undergo the card brands’ approval processes.
3. * New cards have to be manufactured and encoded.
4. * Retail displays may have to be modified.
5. * Card distributor agreements will have to be rewritten.
6. * Back-end data processing systems may have to be reprogrammed.

Readying for the Transition

MAP will be out front in helping our clients prepare for the transition. In addition to continuing to offer our very popular general-purpose reloadable card product, we will offer a new Gift Card product that fully complies with the 2009 CARD Act. The following is an overview of MAP’s Action Plan to respond to the Federal Reserve’s New Gift Card Rules:

1. 1. Webinars on Selling Existing Card Stock. We know that you will most likely have existing card stock “on hand” on August 22, 2010. Your existing card stock of general-purpose reloadable cards fully complies with the new Gift Card rules as long as it is not marketed as Gift Cards. MAP will offer Webinars beginning in July to assist you in selling your existing card stock and moving forward with a successful Prepaid Card program.
2. 2. Webinars on the Sale of Gift Cards. In many ways, you will be able to sell Gift Cards as you have sold the general-purpose reloadable cards, using PAT and through mail order. However, Gift Cards do require new stock that includes terms and conditions that are printed on the cards. MAP will offer Webinars and training to help you fully understand the new Gift Card rules.
3. 3. Five (5) Free Gift Cards. Once MAP has its Gift Card program in place - one that fully complies with the new rules - we will send you Five (5) Free Gift Cards and an agreement addendum. These tools will assist you in choosing how you want to continue to sell Prepaids at your credit union.

Want to transfer money on the move? There’s an app for that. As the popular Apple ad goes, more Americans are discovering the benefits of mobile banking and the applications that facilitate it.

Read More http://www.wired.com/epicenter/2010/01/mobile-banking-payment/#ixzz0oUPnwTU6

A battle is heating up over the right to process payments when you wave your cellphone over a sensor to buy goods at a local merchant. Visa made waves this week by announcing a collaboration with DeviceFidelity, which makes an iPhone case called In2Pay with a near-field communications microSD card embedded in it that will allow iPhone users — whose devices lack a microSD card — to get in on the action.

Read More http://www.wired.com/epicenter/2010/05/visa-seeks-to-extend-retail-dominance-with-pay-with-iphone-service#ixzz0oUO6×9El

DeviceFidelity partnered with Visa to provide mobile payments using an iPhone app and a special case with a microSD payment card inside it (photo courtesy of DeviceFidelity).