US prepaid processing: survival of the fittest providers?

Boston, July 8, 2013 – Research from Aite Group published today indicates that while the prepaid card market is still growing at a significant rate, there are too many processing solutions in the market, so solution providers must look for opportunities to consolidate with other processors or parts of the value chain in the market.

Issuers and program managers today have many processing solution choices. However, prior to seeking a processing solution decision makers should have a clear picture of the amount of financial, resource investment and commitment that the prepaid program can support. Research shows that due diligence is required to understand the complexity of prepaid offerings that include multiple prepaid programs, products, features and marketing through multiple distribution channels.

Aite Group requested information from 17 providers that offer different processing models and solutions supporting different types of prepaid programs. Prepaid processing solutions tend to fall into two camps; companies that support larger scale programs and those that cater to smaller firms. Larger issuers and program managers are better served by hosted processing solutions. Smaller organizations with limited abilities should look no further than a turn-key solution.

“Business and technology teams should work together to identify the priorities that best support an organization’s requirements to manage the prepaid business. Portfolio size and scale alone are not enough to make the determination. It is imperative to have a thorough understanding of the product sets and delivery channels that will be marketed to determine the right processing model,” says Madeline Aufseeser, senior analyst in retail banking at Aite Group.