First Data Corp. Says that Prepaid Spending is Up, But Still Slow

by Mercator Advisory Group 0

First Data Corp., an electronic payments processor, said on July 18 that activations, redemptions, and reloads of closed-loop prepaid cards were up in the second quarter of 2011 when compared with the same time period last year. The company attributes the growth to rising prices and summer holidays, but also said growth was hampered by bad economic news.

Economic trends played a significant role in consumer behavior during the second quarter. April saw the overall year-over-year dollar volume growth of gift card activations, redemptions and reload slow after the majority of holiday cards were redeemed during the first quarter. Dollar-volume of activations, redemptions and reloads rebounded during the May and June Mother’s Day, Father’s Day and graduation gift-giving season.

First Data notes that closed-loop cards remain a popular choice for consumers. The license to spend conferred by a merchant’s prepaid card likely will continue to be popular, even through rough economic times, because they offer a way to give someone a gift on a budget and yet still contribute to the recipient’s desired purchase regardless of its size.

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