The increase of smartphone ownership has created a new channel for the sale and redemption of closed-loop prepaid cards. If payments companies have their way; smartphone users will soon be using their devices to make payments, not just through buying things using an Internet application, but also at the point of sale. One could argue that the goal seems to be replacing all analog forms of payment and drawing everyone into a larger network where all of a customer's behavior can be tracked, cataloged, and used to drive future purchases.
Much of the attention on mobile payments has centered on open-loop payments because they would open up the market to a variety of applications and get mobile payments closer to the ideal mentioned above. The real successes in mobile, however, have come on the closed-loop side, where issuers have opportunities to use this new channel to sell more cards and in some cases to solve problems of moving customers in and out of their stores, prov
iding rewards, and creating new kinds of shopping experiences.
Mercator Advisory Group's new report, Mobile Opportunities for Closed-Loop Issuers, examines some current applications in play as well as mobile considerations for closed-loop issuers.
“Finding technology that works with the business plan should be the first consideration. Issuers need to avoid the temptation of adopting a solution in search of a problem,” says Ben Jackson, author of the report and Senior Analyst with Mercator's Prepaid Advisory Service. “Ultimately, focusing on the needs and desires of the customer will answer the why and how questions of mobile payments more effectively than anything else.”