How to avoid prepaid mobile app 'bottlenecks'

According to new Mercator Advisory Group research, merchants can share in a huge prepaid mobile app opportunity, but only with careful planning and deployment of programs. But Mercator said "bottlenecks" to successful implementations result from lack of staffing to handle the volume of payments that flow through the mobile apps.

"Merchant gift card program managers tend to be significantly understaffed relative to the dollar volume flowing through multiple channels and through multiple third-party partners, which all need special settlement arrangements and to be monitored and managed properly," said Tim Sloane, Vice President of Client Services and Director of Prepaid Advisory Service at Mercator.

Sloane, who authored Managing Gift Card Operational Complexity and Enabling a Mobile Channel Platform, added that the various partners that comprise mobile app services have different priorities, which adds complexity to programs.

Sloane wrote, "Third-party distribution partners, e-commerce partners, virtual card partners, business-to-business (B2B) partners, and new mobile app technology partners all have different goals, different reporting needs, different settlement reporting times and datasets, so it's no wonder that gift card program managers find it difficult to implement appropriate governance over an operation that can account for up to 10 percent or more of a merchant's cash flow."

Sloane illustrated the challenges inherent in a mobile app value chain with an airline that deploys a closed-loop mobile app integrated with airport merchants. "An airline with a mobile app can embed apps from other merchants located in the airport gate area," Sloane said. "A restaurant, an electronics store, a coffee shop, or any merchant from a wide range of categories, all represent categories the consumer may be interested in while preparing to leave on a flight.

"The level of integration can be as simple as enabling a location service within the gate area or more complex, from an incentive offer for a visit, to an offer to download the full mobile gift card payment solution."

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