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Table of Contents

Lead Story

Marketing: Are you in or out?


Industry Update

Could community bank loans help the payments world?

Heartland settling up with Visa

Card sales' decline no longer accelerating

Card brand financials remain positive

Trade Association News


Anthony Martin

Glossary of common data security terms

Selling Prepaid

Prepaid in brief

From plastic to virtual: Evolution of stored-value

Walter Paulsen
Giiv Inc.


Debit rules and other musings

Patti Murphy
The Takoma Group


Street SmartsSM:
Look ahead, show you care

Jon Perry and Vanessa Lang
Merchant Services Inc., Fort Worth, Texas

POS unplugged

Dale S. Laszig
Castles Technology Co. Ltd.

Claws in merchant contracts

Adam Atlas
Attorney at Law

Managing your fraud risks

Nicholas Cucci
Network Merchants Inc.

Company Profile

IPP of America Inc.

New Products

Tracking the ISO beehive

Merchant Flo

Getting merchants to pay micro-ly

Integrity Payment Systems and
Quicksilver Payment Solutions LLC


Curing merchants' sales colds



Resource Guide


A Bigger Thing

The Green Sheet Online Edition

February 22, 2010  •  Issue 10:02:02

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"Stay hungry, stay foolish."
- Steve Jobs

From plastic to virtual: Evolution of stored-value

By Walter Paulsen

Since their introduction in 1997 at a single Blockbuster Inc. video store location in Florida, gift cards have been an unstoppable force in the retail landscape. Gift cards have changed the way U.S. consumers shop. And gift card providers have pocketed billions of dollars in revenue annually.

But with the onset of 2010 and a new decade, there are signs the plastic gift card wave crested about the same time as the mortgage market. Prepaid as a category has room for growth and innovation, and consumers will want payment alternatives to cash that are convenient and secure. But changes - big changes - are coming.

Imperfect plastic

Despite the half-century dominance of plastic for electronic payments, the format has never been perfect. For starters, cards are made from a petroleum-derived product, so their use is environmentally unfriendly. Second, credit cards used by consumers for many years can be produced economically, but plastic is a relatively expensive format for stored-value, especially for third-party distribution, where several cards may be printed for every one that sells.

Card production facilities experience frequent seasonal bottlenecks, as well, with companies procrastinating in the summer and then jamming in large orders in the fall. So production runs full bore in the late summer and fall and sits relatively idle much of the rest of the year. Print runs need to be large, and customization is expensive.

Finally, from the consumer perspective, one or two credit cards are easy to carry. But the bulk of all that plastic adds up, and people don't want to carry more than a few cards. Other than disposable, single-use phone cards, nonplastic formats haven't caught on with consumers, so all the cards are the same size and thickness.

There are no clear winners in the new format game, but there are losers, and much of the game remains to be played. Below is a current scorecard and a look ahead about how the future might evolve.

Sunsets and sunrises

Plastic will not die quickly or quietly, but seeds that have been planted for alternative forms of digital payment will grow quickly in 2010 and thereafter.

The amount of time consumers spend in social networks and on mobile devices will create opportunities for massive disruption of established players and accelerate new forms of distribution.

Looking at recent history in the space, Stored Value Solutions and First Data Corp.'s ValueLink LLC were well positioned to dominate third-party gift card distribution, but aggressive startups like Incomm and Blackhawk took the lead and never looked back.

Will Blackhawk and Incomm extend their dominance of retail to Internet, social media and mobile gifting, or will new companies be faster, better and more clever about how to attack the market?

Will wireless carriers like Verizon Wireless and AT&T crush startups and control mobile gifting? Will Facebook take over virtual gifts, or will Zong, Zynga Game Network Inc. and a host of other startups succeed?

I'll make no predictions, other than to observe that the most successful online retailers, including Inc., Inc. and eBay Inc., not to mention Dell Inc. and Apple, are not companies steeped in the brick-and-mortar business mindset.

The future course of prepaid and digital gifting is yet to be written, but expect new authors to write the most interesting and lucrative chapters.

For more stories from SellingPrepaid E-Magazine, as well as breaking news and forums devoted to the prepaid sphere, please visit

Walter Paulsen is Senior Vice President of Business Development and Retail for Giiv Inc., a mobile and social gifting company. He was previously President of CardFact, and prior to that a founding Vice President at Blackhawk Network. Walter can be reached at or

Notice to readers: These are archived articles. Contact names or information may be out of date. We regret any inconvenience.

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