Gift Giving Made Easy with Prepaid
Often, our holiday shopping lists include individuals that are hard to shop for. Whether that is a family member or a hard-to-please friend, sometimes that single perfect gift just doesn’t exist. And what about those individuals you just don’t know that well? You may not know what kind of gift to get, let alone what color or style they’d want.
The easiest, most well-received option has, and continues to be, open-loop prepaid gift cards. An increasing number of shoppers have realized that purchasing prepaid cards for family and friends during the holidays eliminates the stress that can come with searching for the “perfect gift.”
The National Retail Federation has announced that for the 12th year in a row, gift cards remain the most popular items on consumers’ holiday wish lists. Additionally, consumers are expected to spend 4.1 percent more on gift shopping this year than they did during last holiday season. Undoubtedly, many of these savvy shoppers will be stuffing stockings with prepaid gift cards.
Deloitte’s 2018 Holiday Retail Survey found that gift cards topped the lists of the type of gifts consumers planned to purchase. Further, research from Mercator Advisory Group predicts open-loop gift card loads to increase at a rate of 3 percent through 2020, increasing total loads to $22.3 billion.
Prepaid cards are so popular, especially during the holiday season, because of the benefits they provide, including:
Flexibility: Prepaid cards can be used anywhere debit cards are accepted. That means gift recipients have the flexibility to choose the gifts they really want, wherever they want, helping avoid cumbersome returns processes and gift receipts. With a little creative packaging, gift givers can even say why they chose the card and suggest how the funds can be used to show the thoughtfulness behind the gift. For example, the card might go to fund a trip or favorite hobby.
Convenience: Open-loop gift cards can be purchased either online or at the store, helping busy and last-minute shoppers get to everyone on their lists. Additionally, the funds loaded onto prepaid gift cards do not expire for five years, allowing gift recipients to save up for anything from must-have gadgets to upcoming vacations.
Fee-Free: Open-loop gift cards are typically fee-free for the user. The purchaser might have a nominal fee to cover the cost of the card (typically between $2-$5) but then, every dollar put onto the card can be used by the recipient for the things they want most.
Universally Loved: Open-loop gift cards make the perfect gift, especially for last-minute shoppers or picky recipients. Choosy friends, long-distance relatives, and even your mailman or kids’ teachers are sure to be happy. Because prepaid gift cards can be used almost everywhere and are activated as soon as they are purchased, an open-loop gift card is bound to be a favorite for anyone on your holiday shopping list.
For more information, check out and share our infographic.
Payroll card providers have it a little tougher than many other prepaid card companies. In addition to making sure their programs comply with federal laws and regulation, they also need to fit their programs into a mélange of state laws that govern how workers receive their wages.
The general principle underlying nearly every payroll law is that workers cannot be forced to accept their pay in a way that costs the worker money. The problem is that nearly every state seeks to enforce this principle in different ways. Some states will allow employers to require electronic payments, while other states will mandate that an employee needs to be paid to the penny in cash, if that is what the worker wants.
To help members make sense of all these state laws, NBPCA’s outside regulatory counsel, Baird Holm LLP, has conducted a survey of all 50 state payroll laws that covers whether payroll cards are permitted, what fee restrictions exist, and what state disclosures apply to payroll card programs.
Companies can use this survey to make sure that their programs are ready to cross state lines throughout the United States and to avoid pitfalls as they move into new states.
The price for the survey is $5,000, and a portion of the proceeds will go to support the NBPCA. The picture below gives an overview of what is available. The level of detail provided for each state corresponds to how complicated each state’s laws are. You can purchase the report here.
Discover Financial Services is best known for its credit cards, but the company has products across the financial services spectrum. Credit, debit, and prepaid transactions all run on its network.
In the latest episode of the Power of Prepaid Podcast, we talk with Claudia Schaefer, Business Development Executive for Strategic Initiatives at Discover about how prepaid fits into Discover’s overall business and what its capabilities are.
While credit may be the largest part of its business, nevertheless prepaid products have been a tool Discover has used to work with FinTech companies. It has worked with a variety of companies to bring payments into Fintech products of all types. We discuss what companies need to do to be successful at adding payments, and what Discover looks for when selecting partners.
Along with that, we talk about how Discover has used its network resources to become a leader in Restricted Authorization Networks. These networks use the Discover rails to move transactions, but they lock down where payments can happen using criteria such as merchant category codes or specific merchant IDs. Restricted Authorization Networks have been used to implement incentives, health care spending, and gift cards to name just a few examples.
Learn more by listening to our podcast here, or wherever you get your podcasts. Don’t forget to subscribe and leave use a review.
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