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Pre-paid and Gift Cards - US

Published by: Mintel International Group Ltd.

Published: Jun. 1, 2008 - 82 Pages


Table of Contents


Scope and Themes

What you need to know
Definition

Consumer survey data

Abbreviations

Terms



Executive Summary

Overview

Who is offering prepaid cards?

What are the opportunities?

The impact of prepaid cards

What are the challenges?

Potential for the market

Credit crunch may enhance prepaid card usage

Struggling economy may diminish use of specific retailer gift cards

Gift cards being used to stimulate business



Market Size and Forecast

Open-loop transactions and dollar volume

Closed-loop transactions and dollar volume

Figure 1: Open-loop and closed-loop prepaid summary, transactions and dollar value, 2006

Gift cards

Figure 2: Biggest issuers of gift cards, in alphabetical order, 2007



Competitive Context

Key points

Ongoing challenges to the industry

Major players

Finding wider distribution channels

Standardizing the industry

Does brand matter?

Gift cards as sales incentives

Figure 3: Most popular gift cards given as customer incentives, 2005

Partnering to distribute gift cards

“Smarter” gift cards

Gift cards for good works

Travel gift cards

Gift cards doing business

Customizing cards for business

Gift cards: growth of a “secondary” market



Marketing Channels

Key points

How are prepaid and gift cards distributed?

ATMs as new channel for prepaid gift cards



Prepaid and Gift Cards: Key Target Markets

Key points

Marketing to teens

How many gift cards are teens buying and how much do they spend?

Boys use gift cards more than girls

Can gift cards lead teens to prepaid cards?

Gift cards as wedding gifts

Prepaid cards for the foreign market

Prepaid cards for the unbanked or underbanked

How big is the unbanked market?

Who are the unbanked?

Figure 4: Unbanked, by immigrant group, 2007

Why don’t these consumers use banks?

Figure 5: Major reasons reported for not holding a checking account, 2007

Can these unbanked or underbanked consumers be won over?

Who do the unbanked or underbanked do business with and why?

Targeting payroll business

Prepaid cards for healthcare

Prepaid cards for teachers

Prepaid cards for seniors



Market Drivers

Are consumers less willing to spend?

Can prepaid lead to better things?

Legislative developments

Innovation and Innovators

How are prepaid and gift card products developing?

Retailers capitalize on one-time opportunities

Responding to gas prices

Making card use more flexible

Innovative distribution channels - kiosks

Success with the unbanked

Prepaid cards linked to auto loans

Banks using gift cards as incentives

Gift cards that speak

Gift cards for the ultra wealthy

Virtual gift cards becoming more real

Group gift cards

Round gift cards



Advertising and Promotion




The Consumer - Those Buying and Those Receiving Gift Cards

Key points

Gift cards: how many are consumers buying?

Figure 6: Number of gift cards purchased in the last 12 months, by gender, April 2008

Figure 7: Number of gift cards purchased in the last 12 months, by age, April 2008

Figure 8: Number of gift cards purchased in the last 12 months, by race/ethnicity, April 2008

Gift cards: how many are consumers receiving?

Figure 9: Number of gift cards received in the last 12 months, by gender, April 2008

Figure 10: Number of gift cards received in the last 12 months, by age, April 2008

Figure 11: Number of gift cards received in the last 12 months, by race/ethnicity, April 2008

Gift cards: what are the occasions for buying them?

Figure 12: Occasions for purchasing gift cards, by gender, April 2008

Figure 13: Occasions for purchasing gift cards, by age, April 2008

Figure 14: Occasions for purchasing gift cards, by race/ethnicity, April 2008

Gift cards: what are the occasions for receiving them?

Figure 15: Occasions received gift cards, by gender, April 2008

Figure 16: Occasions received gift cards, by age, April 2008

Figure 17: Occasions received gift cards, by race/ethnicity, April 2008



The Consumer - Behavior and Attitudes of Purchasers and Users

Gift cards: do they work as sales incentives?

Figure 18: Received gift card as an incentive from a retailer, by gender, April 2008

Figure 19: Received gift card as an incentive from a retailer, by age, April 2008

Figure 20: Received gift card as an incentive from a retailer, by race/ethnicity, April 2008

Gift cards: how much will consumers pay in fees?

Figure 21: Willingness to pay a convenience fee for a universal gift card, by gender, April 2008

Figure 22: Willingness to pay a convenience fee for a universal gift card, by age, April 2008

Figure 23: Willingness to pay a convenience fee for a universal gift card, by race/ethnicity, April 2008

Universal gift cards: what are consumers paying for them?

Figure 24: Amount of fees charged for last universal gift card purchased, by gender, April 2008

Gift cards: what perks might work?

Figure 25: Features desired in a gift card, by gender, April 2008

Figure 26: Features desired in a gift card, by age, April 2008

Figure 27: Features desired in a gift card, by race/ethnicity, April 2008

Gift cards: how do consumers prefer to purchase them?

Figure 28: Preferred marketing channel, by gender, April 2008

Figure 29: Preferred marketing channel, by age, April 2008

Figure 30: Preferred marketing channel, by race/ethnicity, April 2008

Prepaid cards: do consumers want their kids to use them in college?

Figure 31: Children attending college, would you prefer they use prepaid cards?, by gender, April 2008

Figure 32: Children attending college, would you prefer they use prepaid cards?, by race/ethnicity, April 2008

Prepaid payroll cards: which consumers are using them?

Figure 33: Prepaid salary card usage, by gender and age, April 2008

Figure 34: Prepaid salary card usage, by race/ethnicity, April 2008

Prepaid payroll cards: what features do consumers like?

Figure 35: Appeal of prepaid salary card usage, by gender, April 2008

Figure 36: Appeal of prepaid salary card usage, by age, April 2008

Figure 37: Appeal of prepaid salary card usage, by race/ethnicity, April 2008

Prepaid cards: what don’t consumers like?

Figure 38: Reasons for not being interested in using stored-value salary cards, by gender, April 2008

Figure 39: Reasons for not being interested in using stored-value salary cards, by age, April 2008

Figure 40: Reasons for not being interested in using stored-value salary cards, by race/ethnicity, April 2008



Appendix: Advertising and Promotion

Figure 74: Email advertisement from American Express, January 2008

Figure 75: Metabank prepaid MasterCard Card acquisition email, March 2008

Figure 76: Johnny Cash Prepaid mastercard email advertisement from Monterey county Bank, January 2008

Figure 77: Palm Desert Prepaid MasterCard email advertisement, January 2008

Figure 78: CapitalOne Prepaid Visa Card advertisement, April 2007

Figure 79: Commerce Bank (New Jersey) Visa gift card print advertisement, June 2008



Appendix: Summary of Other Studies

Key points

Gift cards: are consumers using them more often?

Figure 80: Five-year tracking of American consumers’ year-round gift card purchases and use, 2001-05

Gift cards: which types are consumers using?

Gift cards: when are consumers buying them?

Gift cards: who are consumers buying them for?

Gift cards: where do consumers purchase them?

Gift cards: are consumers going online?

Gift cards: how much do consumers spend?

Gift cards: getting “rapped”

Prepaid cards: who uses them?

Prepaid cards: what do consumers like about them?

Figure 81: Utilization of funds loaded into the prepaid card account, February 2007

Figure 82: Average cardholder transactions, February 2007

Prepaid cards: when do consumers use them?

Figure 83: Holiday credit/debit card volume for the five weeks ending December 25, 2005-07

Prepaid cards: how often do consumers load and spend the funds?

Figure 84: Frequency and value of loads made into account, 2007

Figure 85: Frequency and value of POS transactions, February 2007

Prepaid cards: how much do consumers pay to use them?

Figure 86: Typical consumer fees for activating and using prepaid cards, February 2007

The unbanked and prepaid cards: spending habits

Figure 87: The primary unbanked spending categories (in gross dollars spent), 2006

The banked and prepaid cards: spending habits

Figure 88: Banked spending categories (in gross dollars), 2006



Appendix: Trade Associations

Abstract

In what is fast becoming a "cashless society," are U.S. consumers poised to further embrace prepaid and gift cards? This report explores who uses these cards-when, where, why and how, including:

  • The most promising demographic segments and markets for prepaid and gift cards
  • The impact of these cards on consumer-directed health care plans and college savings plans
  • Uses while travelling
  • Customization of look and message
  • Broader usage among a wider range of merchants
  • Use as sales incentives
  • Features people find appealing and those they don't



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