Drop in interchange could help, hurt prepaid cards

Drop in interchange could help, hurt prepaid cards
Tags: Bank / Credit Union, Debit / Credit, Other, Prepaid / Stored Value / Gift Card, Transaction Processing
March 20, 2007

Digital Transactions: Should efforts by merchants to force down interchange rates succeed, the expanding prepaid-card market will be forced to confront one of two very different outcomes, says one industry expert. Cards issued by merchants could benefit, but those issued by banks will likely take a hit. Success for the merchants' campaign against interchange "would seriously disrupt the business model" for these cards, said David S. Evans, founder of Market Platform Dynamics, a Cambridge, Mass.-based consulting firm.