For program managers perhaps the greatest challenge for physical and digital prepaid distribution is structuring organizational support to match business objectives. Another challenge, which is shared by executives across the payments industry, is that managers must also stay abreast of regulatory updates impacting their programs.
One example in the prepaid realm is the Federal Reserve's ECO-Gift Card Act of 2010, which introduced new rules and amended Regulation E of the Credit Card Accountability Responsibility and Disclosure Act of 2009. It disallowed certain fees unless clearly disclosed and extended card expiration to five years from date of issue. The Federal Trade Commission and Consumer Financial Protection Bureau have also weighed in, and new state mandates are posted on the National Conference of State Legislatures' website, www.ncsl.org.
That said, prepaid programs face unique hurdles. "This notion that you have to create mechanisms that can handle funds being preloaded into an account and to now allow those funds to be drawn beyond a positive balance is fundamental," said Seamus Smith, Chief Executive Officer of Sage Pay. "And the creation of issuer-related rules to manage that is fundamentally different from running a traditional credit card or even a debit card account without the draft facilities perhaps of a bank account."
Nonetheless, prepaid offerings today are more expansive. "It has enabled smaller institutions, because there is less risk if managed properly, to come to market with prepaid offerings," Smith said. "We've seen a strong uptake of travel related prepaid products that can handle multiple currencies on one card and deliver competitive foreign exchange rates."
Having clearly defined objectives will shape how merchants manage their prepaid programs. In smaller organizations, one person may be designated; but in larger organizations where several departments must interface, collaboration is the favored approach.
First Data Corp. outlines several prepaid management approaches in Secrets to Gift Card Success: Six Proven Program Management Approaches, which are summarized as follows:
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