Building a better promotional prepaid card program

Prepaid Promotional Gift Card Programs

Prepaid card promotions are a popular marketing tool used by companies of all sizes to incentivize prospective and existing customers, reward loyalty, and drive sales. With their flexibility, ease of use, and high perceived value, prepaid cards have become a go-to promotional tool across various industries. 

Whether it's offering prepaid cards as a reward for making a purchase, a loyalty program perk, or an employee incentive, companies are increasingly turning to prepaid card programs to achieve their marketing and sales objectives.

In this article, we’ll highlight some signs that the technology you’re using for your prepaid card program might be outdated and the key features of modernized prepaid card programs that every company should take advantage of. First, assess your current promotional card program by identifying signs that your promotional card program is outdated

Six signs your prepaid promotional card program is outdated

You fund the entire program upfront

Requires you to tie up the entire program’s budget at the beginning of the program.

You rely on issuing ONLY physical cards

Physical card issuing is time-intensive, and printing physical cards eats into the profitability of the program.

You don’t fully control or have flexibility around assigning expiration dates to cards

Card expiration dates are controlled by a third-party issuer, leaving little room for program flexibility.

You don’t capture breakage (unused cards or amounts)

Breakage either goes to your prepaid card program vendor or back to the state the card was issued in.

You don’t capture spending insights

You either get a lagged summary of spending data at different moments within the card program's lifecycle, or no spending data at all.

The prepaid cards you offer are only valid for spending with your company

Commonly called closed-looped, these cards only allow for spending at your company, hindering customer adoption and the ability to capture spending insights from outside your company.

Modernizing your promotional card program 

Created with the best intentions, promotional card programs can end up being in set-it-and-forget-it purgatory. Diminishing results, more costs, and ongoing management responsibility. But there is a way to breathe new life into your program. Prepaid card programs orchestrated through embedded finance benefit both the companies that use them and the customers that take advantage of them.

Just-in-time funding 

Just-in-time funding is one of the most powerful features of modernized prepaid card programs and yields benefits to both the company and to the program participants. With traditional card programs, cards are funded all at once, regardless of when they are activated or used. This up-front outlay of cash directly impacts budgets and cash flow.

Alternatively, just-in-time card funding provides funding flexibility and longer cash retention. Here’s how works:

When a card holder initiates a payment using a prepaid card, the provider immediately verifies that the card has sufficient funds to cover the payment. If the funds are available, the payment is approved, funds will instantly settle between internal accounts.

How this helps the company

The main advantage of just-in-time funding for prepaid cards is that it can help companies better manage their cash flow by reducing the amount of money held in prepaid card program accounts. Rather than having to fund cards in advance, companies fund the card at the point of purchase. Beyond cash flow, just-in-time funding speeds card approvals and declines because of the accuracy of funds available for a particular card, ultimately minimizing the amount of customer support needed throughout the program lifetime.

How this helps the customer

Just-in-time funding can also benefit customers of the prepaid card program, enabling faster and more seamless payment transactions. Verifying the availability of funds in real-time helps to prevent false declined transactions and ensure that payments are completed quickly and efficiently.

Capturing breakage

Breakage is the value of the prepaid card that goes unused or expires before it is fully redeemed. Gift cards must be valid for at least five years, but prepaid cards follow different rules. Traditional promotional cards are purchased in bulk from third-party vendors. These vendors (or the individual US state, as laws dictate) retain any unused value on the cards.  Generally accepted breakage amounts range from 2-4 percent of the card value. (Note: Alviere data suggests some cards still have 20 percent of the value left at expiration.)

If correctly outlined in your terms and conditions, the card recipient forfeits the remaining value of the card to the issuer — your organization. While the goal of the prepaid promotional card program is to create more — and loyal — customers, being able to capture breakage once an issued card expires allows you to re-capture any unused value within the program.

Spending insights

When a company launches a new program that involves prepaid promotional cards, the results typically focus on the program's main goals: new purchases, upgrades, add-ons, etc. A robust, modern prepaid card program delivers insights far beyond initial goals through collecting transactional spending data. If the prepaid card is open-looped (the card can be used anywhere).

1. Leverage partner efforts: Identify potential partners where a large group of a company’s customers are spending.
2. Customize marketing: Tailor marketing efforts to specific audiences. For example, if a company sees that many of its prepaid card customers are spending money on travel, it might focus its marketing efforts on travel-related products or services.
3. Guide product development: Identify trends and patterns in customer behavior to inform product development. For example, if a company sees that a large percentage of its customers are spending money on complementary products or services, those might become new offerings.
4. Enhance customer satisfaction: By tracking customer spending data, companies can gain insights into how customers are using their prepaid cards and where they may be experiencing difficulties or obstacles. This can help companies improve the overall customer experience and ensure that customers are getting the most out of their prepaid cards.
5. Manage risk: Quickly identify potential fraud or misuse of prepaid cards. This can help companies to identify and mitigate risks and to ensure that their prepaid card programs are secure and effective.

Issue virtual or physical prepaid cards

If the goal of your program is to entice someone to take an immediate action, giving them an instant prepaid card can be a huge incentive. The ability to issue virtual prepaid cards becomes a key enabler to drive desired actions. 

Virtual cards have all the same basic features as physical cards (card number, expiration date, and security code), but with one major difference: They can be issued instantly. So instead of waiting for a card in the mail, recipients are immediately rewarded for their action. 

Virtual cards also add a layer of security, as they are less vulnerable to theft or loss. The right promotional card partner will monitor fraud and offer purchase protection, which protects the cardholder’s funds and personal information. 

With the technological advances in point-of-sale (POS) systems, cards can be added to the consumer’s eWallet on their smartphone and used instantly, giving recipients more incentive to take action on your prepaid card program.

Big results from simple changes

Promotional card programs are an important part of customer acquisition and retention marketing strategies. But they also consume large amounts of budget and effort. Purchasing prepaid cards up-front, before they are activated, is a drain on cash and introduces risk into how the cards are used and secured. Also, time lags in delivery can result in program defaults or cancellations.

Rewarding customer actions with immediate access to a prepaid card provides the right incentive, removes risk, and provides complete control over purchase timing and cash flow. Cards are funded as they are first used, and any remaining amount on the cards is owned by the enterprise, not a third-party card issuer. Data from user transactions is also owned by the enterprise, providing insights into customer behavior and spending.

One simple change: Moving to physical or virtual prepaid cards issued through embedded finance means your promotional card program can be more nimble, less cash-flow dependent, and ultimately, more effective.

It's easy to get started 

If you'd like to learn more about the new way to issue prepaid promotional gift cards, contact us today. We'll ask a few questions about your program, so we can develop a custom savings model, so you'll get a better picture of exactly how much cost-savings you can see in your program as soon as this quarter.