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Follow on Google News | Mercator Report: New Strategies for Prepaid Profitability: A Pro Forma AnalysisNew research from Mercator Advisory Group creates a base-level prepaid portfolio pro forma utilizing data from the FRB report"Consumers' Use of Prepaid Cards"
“A common problem for program managers in evaluating a prepaid solution is predicting what values to enter into the business model for cardholder transactions and merchant locations needed to derive interchange and ATM fee income. Equally challenging is determining average card life. This report documents the values determined by the FRB report and identifies the impact of different fee structures and average card life values on the profitability of portfolios of different size. Using a live pro forma model to evaluate portfolios helps expose outcomes that are not intuitive,” comments Tim Sloane, director of Mercator Advisory Group’s Prepaid Advisory Service and author of the report. “This report explains how new network interchange rates have overturned long-held dogma, charts the impact of average card life on card acquisition, and shows the impact of various fee structures on portfolio profitability.” Highlights of this report include: The top merchant categories frequented by prepaid cardholders and the average ticket value for each location, as derived from the Federal Reserve’s PCC research Calculation of interchange revenue (for the merchant categories identified by the PCC) and for interchange income derived from a portfolio Comparison of impact on portfolio income of cardholders’ Impact of direct deposit enrollment on a portfolio’s active card life and profitability Implications of processor point-of-sale transactional costs associated with PIN and signature authorizations offsetting the network interchange rates Metrics regarding the card acquisition levels needed to maintain a stable portfolio across multiple average card life scenarios This report is 32 pages long and has 11 exhibits. Members of Mercator Advisory Group's Prepaid Advisory Service have access to this report as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits. Please visit us online at www.mercatoradvisorygroup.com (http://r20.rs6.net/ For more information and media inquiries, call us at or send an E-mail to info@mercatoradvisorygroup.com. For free industry news, opinions, research, company information and more visit us at www.PaymentsJournal.com (http://r20.rs6.net/ Follow us on Twitter @ http://twitter.com/ About Mercator Advisory Group Mercator Advisory Group is the leading, independent research and advisory services firm exclusively focused on the payments and banking industries. We deliver pragmatic and timely research and advice designed to help our clients uncover the most lucrative opportunities to maximize revenue growth and contain costs. Our clients range from the world's largest payment issuers, acquirers, processors, merchants and associations to leading technology providers and investors. Mercator Advisory Group is also the publisher of the online payments and banking news and information portal PaymentsJournal.com. End
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