Scrutinizing the prepaid value chain

by. Konrad Christensen

Over the past eight years, The Mercator Advisory Group has kept a close watch on the evolution and progression of the prepaid value chain.

In a recent report, Mercator analysts dig into the plusses and minuses of “both minimum and maximum value chain integration.” Minimum integration means a traditional compartmentalized chain, whereas maximum integration means a consolidated chain where the issuer controls many aspects. With pros and cons to both approaches, and ever-evolving regulations that greatly affect the prepaid value chain, now is the ideal time to consider it in more detail. The report, titled Revisiting the Financial Services Prepaid Value Chain, does just that.

Over time, the prepaid value chain has adapted to the unpredictability of the market and ever-changing regulations. In an ongoing effort to “maximize its utility,” prepaid providers have presented opposing ideas – with one side favoring limited integration and the other backing high levels of incorporation.

Specifically, Mercator Analyst Tristan Hugo-Webb says, “Some prepaid card operators… fall toward the low end of the spectrum of consolidation with relatively few changes to the original value chain.” Conversely, some providers choose to closely govern every facet of their prepaid card offering.

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