Closed Prepaid Market Benchmark for 2005: Spend, Growth & Opportunity

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The report "Closed Prepaid Market Performance: Spend, Growth and Opportunity" documents the current state of the Closed prepaid market which grew from $105.98 billion in 2003 to $124.88 billion 2004, an increase of 17.8 percent. This means that in 2004 Closed prepaid segments were responsible for more than 93% of all prepaid spending.

The report "Closed Prepaid Market Performance: Spend, Growth and Opportunity" documents the current state of the Closed prepaid market which grew from $105.98 billion in 2003 to $124.88 billion 2004, an increase of 17.8 percent. This means that in 2004 Closed prepaid segments were responsible for more than 93% of all prepaid spending.

This report identifies spending for 24 Closed market segments, including four Telecom segments, Petroleum, Gift Cards and Prepaid Malls, Government, Digital Content, and Campus. This report also provides an estimate of the number of cards issued for the 19 Closed prepaid market segments that issue cards. Many of these market segments are not card-based, including toll systems that utilize car transponders and utilities that use electric or gas meters. Of course, the Digital Content market is rapidly adopting prepaid solutions and has grown with Games & Ring tones accounting for $2.6 billion in spending alone. The diversity of Closed prepaid market is remarkable and is also a significant contributor to the market success.

The fastest growing segment in this report, discussed in great detail, is Distributed Gift Cards which includes Prepaid Malls.

"The Distributed Gift Card business is growing at 160% and could grow significantly faster if it finds multiple categories that sell as well as Long Distance Cards and Mobile Minute", noted Tim Sloane, Director of Mercator Advisory Group's Debit Advisory Practice. The use of Gift Cards to assist broad based consumer acquisition efforts is also growing rapidly. Consumers find plastic far more compelling than coupons, and marketers are rapidly discovering this fact. When businesses discover that these cards can also be used to more easily convert new customers to in store loyalty cards, the market will grow even faster.

Highlights of this report include:

  • The entire prepaid market, including Open and Closed solutions, has grown by almost 21 percent from $110.7 Billion in 2003 to 133.9 Billion in 2004.
  • Spending across all Closed Solution Segments was $124.88 Billion, an increase of almost 18 percent from the $105.98 Billion spent in 2003.
  • Distributed Gifts, which includes Prepaid Malls, is the fastest growing Closed Prepaid Segment at 160%.
  • Open and Closed Solution Providers need to recognize that several market segments are better served when solutions integrate the attributes delivered by these two different implementations – they are not mutually exclusive as industry dogma would have us believe.
  • The market for Consumer Incentives will skyrocket once businesses understand how Closed Prepaid Solutions can deliver new customers into existing Loyalty Programs while delivering significant new marketing information that will greatly improve marketing results.

The report is 36 pages long and contains 29 exhibits

Members of Mercator Advisory Group have access to these reports as well as the upcoming research for the year ahead, presentations, analyst access and other membership benefits. Please visit us online at http://www.mercatoradvisorygroup.com/.

For more information call Mercator Advisory Group’s main line: 781-419-1700.

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Robert Misasi
MERCATOR ADVISORY GROUP
781-419-1700
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