by Donna M. Airoldi | January 19, 2011

First Data released its monthly SpendTrend report on closed-loop prepaid cards last week, with mixed signals for the close of 2010.

The good news: dollar volume growth and transaction growth rates for closed-loop prepaid gift cards are up overall for reload, activation, and redemption categories over December 2009 figures.

The bad news: growth slowed for all but one category month-over-month from November 2010.

First Data credits deep discounting by merchants during the holiday season and severe winter weather late in the month for the suppressed dollar volume growth in December, and notes that the drop in activations from November could be attributed to consumers purchasing the bulk of their gift cards early in the holiday shopping season.

The most significant annual gains were for reloads, with dollar volume growth soaring 27.1 percent, the highest since April 2010, and transaction growth up 37.1 percent in December 2010. Dollar volume growth for reloads was the only segment to show a gain in November, up from 24.3 percent; transaction growth dipped just 2.2 percent.

Activation growth slowed from 8.6 percent to 2 percent for dollar volume and from 10 percent to 2.1 percent for transactions. Redemption growth dropped from 5.9 percent to 4.6 percent in December, while transactions fell off from 15.9 percent to 9.1 percent.

Ticket prices are still struggling, but the declines seem to be leveling off—average ticket value for activations was flat at $29.79, redemption value was down 4.1 percent to $18.23, and average reload value dropped 7.4 percent to $31.25. The latter is an improvement over the 10.8 percent decline posted in November.

Atlanta-based First Data’s report tracks U.S. same-merchant activations, redemptions, and reloads of merchant-branded prepaid cards, including spending, gift, incentive, and promotional cards.

Results by Category

With regard to categories, specialty retailers were hit hardest, recording negative growth in five of the six categories, reflecting deep discounting by merchants and bargain-conscious consumers. Activation and redemption dollar value growth were -1.1 percent and -1.5 percent, respectively, for this category. Only reload dollar volume showed an increase, of 4.9 percent.

Quick-service restaurants (QSRs) fared the best, with double-digit growth in nearly every category, particularly reloads, which were up 80.3 percent for dollar volume growth and 89 percent for transaction growth, demonstrating that consumers remain budget-conscious.

Casual restaurants were mixed, with activations and redemptions up by single digits, but reloads down, year-over-year, for December.

For more information or to download the full report, visit www.firstdata.com.