[gonzo]

Originally posted by *KK*@Dec 10 2003, 11:50 PM
There are two big hurdles in pre-paid cards. One is distribution, the other acceptance. If you arent doing a card with a Visa or Mastercard logo on it, you have to convince the merchants to accept the product, and make the changes necessary for use. No merchant wants to go to that expense unless there are already a widely distributed network of cards. Cardholders don't want cards they cant use everywhere, the push, especially here in the states by consumers, is to get rid of all the different store brand cards and so forth we used to have and just keep the big brand cards to use everywhere.

Thus you create a Catch -22 situation -- if you cant get merchants to go to the time and expense to accept the cards, then you cant get consumers to get the cards and use them.

Perfect example of this situation is Discover. Owned and backed by Sears, one of the worlds largest domestic consumer creditors and been around for at least 15 years with decent distribution. With the ability to use those cards in EVERY Sears on the planet including catalog sales from day one, where is the distribution on them today? When they first came out they were sending them to Sears customers like candy. If you didn't activate the first one they would keep on sending them to you until you did, even though you could only use it at Sears. But they had a tremendous credit market base to build from with all those Sears cards out there...

The issuing side of Visa has no problem telling you that it takes millions of cards actively being used to begin to have a viable brand. Mastercard and Visa running on the same platform gives them even more viability among consumers, since pretty much every merchant that takes one takes the other -- there's nothing radically different about the process.

Think about Amex too, I want to say its been around longer than Visa and not quite so long as Mastercard.

If you look at the percentage of your sales broken down by payment method you start to see just how lopsided the distribution is on it.

Every possible payment option is a good option -- there is no doubt of that in my mind. Just realize that so long as Visa/MC are an option for consumers that is what most of them will take.

I believe the figure that was quoted recently was that 12% of consumer transactions worldwide were handled with those products. That is a truly scary number.

Deja Vu...

Wheres that thread when we were discusssing how viable Epassporte could be?

I still agree with some of the things you say and disagree with others.


Distribution and acceptance remain the challenge. And that goes for Epassporte too...