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Study FIs need to improve prepaid gift card sales
NEW YORK (8/25/08)--Financial institutions need to improve their marketing of prepaid gift cards, according to a study by PULSE. The Pulse 2008 Debit Issuer Study, which surveyed 62 financial institutions including credit unions, found that only 1% of consumers buy Visa and MasterCard-branded, open-loop prepaid gift cards from financial institutions. However, 61% of financial institutions offer the cards and an additional 16% plan to enter the market. Open-loop prepaid cards are distributed better at heavy traffic locations such as supermarkets, convenience stores, and malls, says the Network Branded Prepaid Card Association (ATM & Debit News Aug. 21). The PULSE report's author, Tony Hayes, director of New York-based management consulting firm Oliver Wyman, says banks are not the best retailers. Banks, especially large ones, do better with payroll, health savings account and flexible spending account cards, the study said. The prepaid card association said many consumers also perceive giving gift cards as giving cash and they don't prefer to give cash. The association suggested that financial institutions promote their gift cards on peak gift-giving holidays, such as Christmas and Father's Day.
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