Where is the money in prepaid?

Rowan —  July 6, 2011 — 1 Comment

There are a number of revenue earners in a prepaid card programme. Some are shared among the partners putting the programme together. Some revenue can be exclusively for a single partner. It is all dependent on what is negotiated. The revenue earners that are up for negotiation, normally include:

Interest on the pool account

The funds matching the balances on the cards are held in a single, interest earning, pool account. It is common that this revenue is shared.

Interchange

Whenever a cardholder uses the card at a point of sale terminal, the issuing bank is due some form of interchange from the acquiring bank. The rates and whether there is interchange at all depends on the specific country the card is being issued in.

Card provider fees

In many programmes, particularly single source gift, payroll, disbursement cards there is a defined “card provider”. It can be a shopping mall, a farmer wanting to pay his workers or an insurance company paying out a claim. The card provider gets some benefit from the recipient using a card rather than cash and there can be fees to the card provider for that benefit

Cardholder fees

The usual transaction fees such as ATM and POS plus a myriad other options. Cardholder fees can include fees for loads, notifications, mobile access, declines, balance or statement queries, call centre access. If there is a way to charge the fee to the cardholder, you will a programme manager somewhere on earth who is charging for it. Increasingly cardholder fees are making some prepaid products unaffordable (link Kim Kardashain)

Foreign exchange revenue

If the card is used outside the country of issue, there is some foreign exchange margin that can be earned.

Breakage

When values on the card expire and depending on your local regulations could be taken as revenue

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One response to Where is the money in prepaid?

  1. 

    What’s wrong with Kim Kardashian? You’re just a jealous hater!

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