THE STORED VALUE

CONSUMER SURVEY

An Exclusive Metric Of Open-Loop Stored Value Card Usage

An Extraordinary Opportunity

To Take Stock Of Your Market!

HARD DATA ON A RAPIDLY EVOLVING MARKET!

The PELORUS Group has conducted an unprecedented survey of Stored Value usage – and plans for usage – among consumers across the United States.  The effort represents a major departure from consensus reports.  Instead of the opinions of consultants and third-party analysts, this survey brings directly to you the plans and needs, the satisfaction levels and service perceptions, of the users themselves.  It clarifies the voice of the consumer, and provides readers with thought-provoking data on how open-loop Stored Value cards are being used today, and why.

In a bold departure from traditional formats, The PELORUS Group is pleased to announce an exhaustive report constructed almost entirely of primary research.  Entitled “The Stored Value Consumer Survey”, it is both a quantitative as well as qualitative report, packed with what product planners, marketing executives, and market developers ask for most – data that is as provocative as it is reliable, accurate, and actionable.

THE STORED VALUE MARKET’S DEFINITIVE METRI

The overarching goal of this report is to provide an actionable understanding of the current and evolving Stored Value markets.  Emphasis is placed on providing the information necessary to develop successful sales and marketing strategies.  The survey results:

·           Detail the specific research methodology employed and provide a thorough description of the respondents.  Specifically,

-         Describe the research methodology and define terminology that will be used throughout the report;

-         Analyze the respondents’ characteristics in terms of their demographic, economic, and geographic distributions.

·           Generate an appreciation of Stored Value card usage offered by key players.

·           Identify environmental differences that can explain patterns of non-usage as well as preferred payment options.  

·           Drill down into proposed Stored Value solutions.

·           Explore user perspectives of, and attitudes toward, Stored Value card usage – today and tomorrow.

·           Provide a more comprehensive and granular understanding of the proposed Stored Value incentives that could be offered.

·           Provide an understanding of how consumers perceive the major issuers of Stored Value cards.

Specific Questions Answered By This Survey

·           How aware are consumers of the currently offered Stored Value solutions?

·           What is the level of awareness of closed-loop solutions?

·           In general, how do consumers want to use Stored Value cards?

·           Who are more likely to use Stored Value cards, males or females?

·           At which ages are consumers most likely to use Stored Value cards?  How does consumer behavior vary by age grouping?

·           Which age demographic is least likely to use Stored Value cards?

·           How do tendencies to employ Stored Value cards vary by education level?

·           At what household income level is Stored Value adoption at its highest.  How does it vary by income level?

·           Which regions within the U.S. are recording the highest level of Stored Value card usage?  The lowest?

·           Which demographic is most likely to have purchased a Stored Value open-loop card in the last 12 months?

·           What are the primary reasons noted by consumers for not purchasing a Stored Value open-loop card?

·           What were the most frequently cited reasons by consumers as to why they prefer retail-specific prepaid cards versus open-system Stored Value cards?

·           Where are Stored Value open-loop cards most frequently purchased?

·           Are consumers more inclined to purchase cards for themselves, or as gifts for others?

·           By dollar amount, how many Stored Value cards were purchased in the last 12 months, by demographic  

-           By consumer for themselves?

-           By consumer as gifts for someone else?  

·           When consumers purchase Stored Value cards for themselves, what are their reasons?

·           For what age groups are these gifts being targeted?

·           In the consumers’ eyes, how do Stored Value open-loop cards compare with:  

-           Cash?

-           Checks?

-           Credit/Debit Cards?

-           Retailer Specific Cards?  

·           How important are service charges?

·           How do the major brands including American Express, Discover, MasterCard, and Visa compare as providers of Stored Value open-loop cards among consumers?

·           How important is the ability to reload a card to an end user?

·           How important is a card’s general availability?

·           How do consumers forecast their usage of Stored Value cards over the next 12 months:  

-           By Gender

-           By Age

-           By Household Income

-           By Education Level

-           By Region of the U.S.

Research Methodology

The analysis presented in this study is based on a primary market research online survey of 600 consumers undertaken in October 2006.  The selection criteria for a respondent’s inclusion in the study were that the potential respondent has used, or currently uses open-loop Stored Value cards. 

Respondent Characteristics

Environmental data was collected on each respondent to investigate whether any single or combination of these variables could provide target market understanding or segmentation cluster identification.  The following environmental variables were examined and are reported on: gender, age, education level, household income, and respondent’s geographic locations.

Table of Contents

EXECUTIVE SUMMARY

METHODOLOGY AND ENVIRONMENTAL VARIABLES

    Introduction

    Research Methodology

    Report Definitions

    Respondent Characteristics

      Gender Distribution:

        Table 2.1 Gender Distribution - Total

        Table 2.2 Gender Distribution - Users

        Table 2.3 Gender Distribution - Non-Users

      Age Distribution:

        Table 2.4 Age Distribution - Total

        Table 2.5 Age Distribution - Users

        Table 2.6 Age Distribution - Non-Users

      Education Distribution:

        Table 2.7 Education Distribution - Total

        Table 2.8 Education Distribution - Users

        Table 2.9 Education Distribution - Non-Users

      Household Income Distribution:

        Table 2.10 Household Income Distribution - Total

        Table 2.11 Household Income Distribution - Users

        Table 2.12 Household Income Distribution - Non-Users

      Geographic Distribution:

        Table 2.13 State to Geographic Region Mapping

        Table 2.14 Geographic Region Distribution - Total

        Table 2.15 Geographic Region Distribution - Users

        Table 2.16 Geographic Region Distribution - Non-Users

CARD PREFERENCES AND REASONS FOR NON-USAGE

    Introduction

    Reasons for Non-Use

      Figure 3.1 Reasons For Non-Use - Total

      Figure 3.2 Reasons For Non-Use - Gender

      Table 3.1 Reason for Non-Use - Age

      Table 3.2 Reason for Non-Use - Education Level

      Table 3.3 Reason for Non-Use - Household Income

      Table 3.4 Reason for Non-Use - Geographic Region

    Reasons for Selecting Retail-Specific Cards Versus Open-Loop Stored Value Cards

      Figure 3.3 Reasons for Purchasing Retail Specific Cards - Total

      Figure 3.4 Reasons for Purchasing Retail Specific Cards - Gender

PURCHASE AND USAGE PATTERNS

    Introduction

    Where Cards are Purchased

      Figure 4.1 Open-Loop Card Purchase Location - Total

      Figure 4.2 Open-Loop Card Purchase Location - Gender

      Table 4.1 Open-Loop Card Purchase Location - Age

      Table 4.2 Open-Loop Card Purchase Location - Education

            Table 4.3 Open-Loop Card Purchase Location - Household Income

      Table 4.4 Open-Loop Card Purchase Location - Geographic Region

    Purchase for Own Use or Gift

      Figure 4.3 Purchase Open-Loop Card For Self or Gift - Total

      Figure 4.4 Purchase Open-Loop Card For Self or Gift - Gender

      Table 4.5 Purchase Open-Loop Cards For Self or Gift - Age

      Table 4.6 Purchase Open-Loop Card For Self or Gift – Education Level

      Table 4.7 Purchase Open-Loop Cars For Self or Gift - Household Income

      Table 4.8 Purchase Open-Loop Card For Self or Gift - Geographic Region

    Quantities of Cards Purchased and Denominations - Own Use

      Figure 4.5 Percent of Purchase of Open-Loop Cards by Denomination, Own Use - Total

      Figure 4.6 Percent of Purchase of Open-Loop Cards by Denomination, Own Use - Gender

      Table 4.9 Average Number of Open-Loop Stored Value Cards Purchased, Own Use - Age

      Table 4.10 Average Number of Open-Loop Stored Value Card Purchased, Own Use -  Education Level

      Table 4.11 Average Number of Open-Loop Stored Value Card Purchased, Own Use - Household Income

      Table 4.12 Average Number of Open-Loop Stored Value Cards Purchased, Own Use - Geographic Region

      Table 4.13 Percent of Purchases of Open-Loop Cards by Card Denomination, Own Use - Age

      Table 4.14 Percent of Purchases of Open-Loop Cards by Card Denomination, Own Use - Education

      Table 4.15 Percent of Purchases of Open-Loop Cards by Card Denomination, Own Use - Household Income

      Table 4.16 Percent of Purchases of Open-Loop Cards by Card Denomination, Own Use - Geographic Region

    Quantities of Cards Purchased and Denominations – For Gifts

      Figure 4.7 Percent of Purchase of Open-Loop Cards by Denomination, For Gift - Total

      Figure 4.8 Percent of Purchase of Open-Loop Cards by Denomination, For Gift - Gender

      Table 4.17 Average Number of Open-Loop Stored Value Cards Purchased, For Gifts - Age

      Table 4.18 Average Number of Open-Loop Stored Value Cards Purchased, For Gift - Education Level

      Table 4.19 Average Number of Open-Loop Stored Value Cards, Purchased, For Gifts - Household Income

      Table 4.20 Average Number of Open-Loop Stored Value Cards Purchased, For Gift - Geographic Area

      Table 4.21 Percent of Purchasers of Open-Loop Card by Card Denominations, For Gift - Age

      Table 4.22 Percent of Purchasers of Open-Loop Cards by Card Denominations, For Gift - Education Level

      Table 4.23 Percent of Purchasers of Open-Loop Cards by Card Denomination, For Gifts - Household Income

      Table 4.24 Percent of Purchasers of Open-Loop Cards by Card Denominations, For Gifts - Geographic Region

    Reasons for Purchasing Open-Loop Stored Value Cards for Self

      Figure 4.9 Reason for Purchasing Open-Loop Stored Value Cards, Own Use - Total

      Figure 4.10 Reason for Purchasing Open-Loop Stored Value Cards, Own Use – Gender

      Table 4.25 Reasons for Purchasing Open-Loop Stored Value Cards, Own Use - Age

      Table 4.26 Reasons for Purchasing Open-Loop Stored Value Cards, Own Use - Education

      Table 4.27 Reason for Purchasing Open-Loop Stored Value Cards, Own Use - Household Income

    Reasons for Purchasing Open-Loop Stored Value Cards as a Gift

      Figure 4.11 Reason for Purchasing Open-Loop Stored Value Cards, as Gift - Total

      Figure 4.12 Reason for Purchasing Open-Loop Stored Value Cards, as Gift - Gender

      Table 4.28 Percent of Purchasers of Open-Loop Cards by Card Denominations, For Gifts – Geographic Region

      Table 4.29 Reasons for Purchasing Open-Loop Stored Value Cards, as Gift - Age

      Table 4.30 Reasons for Purchasing Open-Loop Stored Value Cards, as Gift - Education Level

      Table 4.31 Reasons for Purchasing Open-Loop Stored Value Cards, as Gift - Household Income

      Table 4.32 Reasons for Purchasing Open-Loop Stored Value Cards, as Gift - Geographic Region

    Types of Purchases That Open-Loop Stored Value Cards Are Used

      Figure 4.13 Types of Purchases Open-Loop Stored Value Cards Used - Total

      Figure 4.14 Types of Purchases Open-Loop Stored Value Cards Used - Total

      Table 4.33 Types Of Purchases Open-Loop Stored Value Cards Used - Age

      Table 4.34 Types of Purchases Open-Loop Stored Value Cards Used - Education Level

      Table 4.35 Types of Purchases Open-Loop Stored Value Cards Used - Household Income

      Table 4.36 Types of Purchases Open-Loop Stored Value Cards Used - Geographic Region

    Age Groups Open-Loop Cards are Given as Gifts

      Figure 4.15 Age Groups Open-Loop Cards Given As Gifts – Total

      Figure 4.16 Age Groups Open-Loop Cards Given As Gifts - Gender

      Table 4.37 Age Groups Open-Loop Cards Given As Gifts - Age

      Table 4.38 Age Groups Open-Loop Cards Given A Gifts - Education Level

      Table 4.39 Age Groups Open-Loop Cards Given A Gifts - Household Income

      Table 4.40 Age Groups Open-Loop Cards Given As Gifts - Geographic Regions

    Importance of Card Characteristics

      Figure 4.17 Importance of Card Characteristics, Mean Score – Total

      Figure 4.18 Importance of Card Characteristics, Mean Score – General

      Table 4.41 Importance of Card Characteristics, Mean Score - Age

      Table 4.42 Importance of Card Characteristics, Mean Score - Education

      Table 4.43 Importance of Card Characteristics, Mean Score - Household

      Table 4.44 Importance of Card Characteristics, Mean Score - Geographic

PAYMENT PREFERENCES, BRAND

  IMPORTANCE, AND FUTURE USAGE PLAN

    Introduction

    Open-Loop Stored Value Cards Versus Other Payment Options

      Figure 5.1 - Open-Loop Cards Versus Other Payment Options - Total

      Figure 5.2 - Open-Loop Cards Versus Other Payment Options - Gender

      Table 5.1 - Open-Loop cards Versus Other Payment Options - Age

      Table 5.2 - Open-Loop cards Versus Other Payment Options - Education Level

      Table 5.3 - Open-Loop cards Versus Other Payment Options - Household Income

      Table 5.4 - Open-Loop Cards Versus Other Payment Options - Geographic Region

    Open-Loop Stored Value Card Brand Perception

      Figure 5.3 - Open-Loop Stored Value Card Brand Perception, Mean Score - Total

      Figure 5.4 - Open-Loop Stored Value Card Brand Perception, Mean Score - Gender

      Table 5.5 - Open-Loop Stored Value Card Brand Perception, Mean Score - Age

      Table 5.6 - Open-Loop Stored Value Card Brand Perception, Mean Score - Education Level

      Table 5.7 - Open-Loop Stored Value Card Brand Perception, Mean Score - Education Level

      Table 5.8 - Open-Loop Stored Value Card Brand Perception, Mean Score - Geographic Area

    Ranking of Different Payment Options for Different Payment Purchase Points

      Figure 5.5 - Ranking of Payment Options at a $5.00 Purchase Level, Mean Score - Total

      Figure 5.6 - Ranking of Payment Options at a $10.00 Purchase Level, Mean Score - Total

      Figure 5.7 - Ranking of Payment Options at a $25.00 Purchase Level, Mean Score - Total

      Figure 5.8 - Ranking of Payment Options at a $50.00 Purchase Level, Mean Score - Total

      Figure 5.9 - Ranking of Payment Options At A $75.00 Purchase Level, Mean Score - Total

      Figure 5.10 - Ranking of Payment Options at a $5.00 Purchase Level, Mean Score - Gender

      Figure 5.11 - Ranking of Payment Options at a $10.00 Purchase Level, Mean Score - Gender

      Figure 5.12 - Ranking of Payment Options at a $25.00 Purchase Level, Means Score - Gender

      Figure 5.13 - Ranking of Payment Options at a $50.00 Purchase Level, Means Score - Gender

      Figure 5.14 - Ranking of Payment Options at a $75.00 Purchase Level, Means Score - Gender

      Table 5.10 - Ranking of Payment Options at a $10.00 Purchase Level, Mean Score - Age

      Table 5.11 - Ranking of Payment Options at a $25.00 Purchase Level, Mean Score - Age

      Table 5.12 - Ranking of Payment Options at a $50.00 Purchase Level, Mean Score - Age

      Table 5.13 - Ranking of Payment Options at a $75.00 Purchase Level, Mean Score - Age

      Table 5.14 - Ranking of Payment Options at a $5.00 Purchase Level, Mean Score - Education Level

      Table 5.15 - Ranking of Payment Options at a $10.00 Purchase Level, Mean Score - Education Level

      Table 5.16 - Ranking of Payment Options at a $25.00 Purchase Level, Mean Score - Education Level

      Table 5.17 - Ranking of Payment Options at a $50.00 Purchase Level, Mean Score - Education Level

      Table 5.18 - Ranking of Payment Options at a $75.00 Purchase Level, Mean Score - Education Level

      Table 5.19 - Ranking of Payment Option at a $5.00 Purchase Level, Mean Score - Household Income

      Table 5.20 - Ranking of Payment Option at a $10.00 Purchase Level, Mean Score - Household Income

      Table 5.21 - Ranking of Payment Option at a $25.00 Purchase Level, Mean Score - Household Income

      Table 5.22 - Ranking of Payment Option at a $50.00 Purchase Level, Mean Score - Household Income

      Table 5.23 - Ranking of Payment Option at a $75.00 Purchase Level, Mean Score - Household Income

      Table 5.24 - Ranking of Payment Option at a $5.00 Purchase Level, Mean Score - Geographic Region

      Table 5.25 - Ranking of Payment Option at a $10.00 Purchase Level, Mean Score - Geographic Region

      Table 5.26 - Ranking of Payment Option at a $25.00 Purchase Level, Mean Score - Geographic Region

      Table 5.27 - Ranking of Payment Option at a $50.00 Purchase Level, Mean Score - Geographic Region

      Table 5.28 - Ranking of Payment Option at a $75.00 Purchase Level, Mean Score - Geographic Region

      Table 5.9 - Ranking of Payment Options at a $5.00 Purchase Level, Mean Score - Age

    Purchase Activity of Open-Loop Stored Value Cards Over Next 12 Months

      Figure 5.15 - Purchasing of Open-Loop Stored Value Cards Over the Next 12 Months

      Figure 5.16 - Frequency of Purchasing Open-Loop Cards Over the Next 12 Months - Gender

      Table 5.30 - Purchasing of Open-Loop Stored Value Cards Over the Next 12 Months - Education Level

      Table 5.31 - Purchasing of Open-Loop Stored Value Cards Over the Next 12 Months - Household Income

      Table 5.32 - Purchasing of Open-Loop Stored Value Cards Over the Next 12 Months - Geographic Area

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Some Excerpts From The Report:

"There are differences in responses between genders worth noting.  Males are more likely to purchase on open-loop stored value card at a convenience store than a female.  21% of males indicated purchasing a card at a convenience store while only 15% of females indicated a convenience store.  There were notable findings in the responses among education levels.  As the income level increased, so did the purchase preferences for kiosks and banks.  Only 4% of high school respondents looked to banks for card purchases.  That compares to 12% for post graduate respondents.  Kiosks were favored by 2% of high school respondents compared to 14% for respondents in the post graduate segment.  Compared to the total respondents, there was a significant difference in the use of pharmacies by the post graduate group.  20% of the total respondents purchased in pharmacies, while 31% of post graduates did the same."

"For all age groups, the open-loop stored value card denomination most purchased is the $20 - $25 value level.  82% of respondents 55 and over that purchased cards selected this denomination."

"Figure 5.1 depicts how consumers perceived open-loop stored value cards versus other payment options.  Out of the respondents, 95% indicated that open-loop cards were better to use than a check.  83% view open-loop cards better to use than cash while 86% believe open-loop cards are better to use than credit/debit cards.  93% believed they are better than retailer-specific cards."

"Figure 5.15 depicts how respondents view their purchase activity of open-loop stored value cards over the next 12 months.  Respondents were given four choices and could choose only one.  57% of respondents indicated that their purchases of open-loop stored value cards would stay the same over the next 12 months.  34% suggested purchase activity would increase.  Only 3% indicated purchase activity would decrease."

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ABOUT THE PELORUS GROUP

The PELORUS Group has emerged as one of the fastest growing independent market research houses in the United States, and is widely acknowledged as a leader in financial services  data gathering and market analysis.  Market research reports dedicated to the arena include:  Stored Value: New Markets, New Growth; Global Stored Value; Stored Value: 21st Century Currency; Stored Value: Transforming The Payments Industry; Alternative Payments; and the Wireless Payments Customer Survey.  In addition to its own in-house staff of professionals, the firm has attracted some of the most sought after authorities to research industry studies and conduct custom assignments.  It has built a clientele base global in proportions, while leveraging its expertise in all facets of telecommunications and information services.

The PELORUS Group

Navigating Change In Emerging Financial Services Markets

The PELORUS Group is a market research, management consulting, and business planning services firm.  Its charter is to provide market research, business management, and strategic planning services to its worldwide base of clientele.

Its challenge is to veer away from consensus research, and expose the myths within key financial services industries.

CUSTOM CONSULTING SERVICES

The PELORUS Group regularly advises clients on a proprietary level.  Its senior consultants are highly-recognized industry authorities that can work with you in the areas of business development and market planning.  Let our Custom Services Division help your organization realize its goals!

FOR FURTHER INFORMATION, PLEASE CALL PELORUS AT 908-707-1121

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