Essential-Item Purchases Popular in Visa Prepaid Card Spending June 09, 2009
By William Ng
An analysis of Visa prepaid incentive cards released today by Scotiabank and Berkeley Payment Solutions shows that spending on day-to-day necessities, such as food, prescription drugs, and household products, is up while spending on luxury items is down, reflecting tough economic times.
Scotiabank, the third-largest Canadian bank, and Berkeley Payment Solutions looked at aggregate quarterly spending on 5,000 Visa prepaid cards issued by the bank and used over a 15-month period that ended in April. Their analysis found that spending at fast food restaurants skyrocketed (107%) during the period, followed by jumps in purchases at discount stores (37%), drug stores and pharmacies (26%), and grocery stores (20%). Clothing spend at non-department stories also was popular, while spending on furnishings, big-ticket items, durable goods for the home declined 44 percent and spending at department stores dropped 35 percent.
The partners concluded that users of the prepaid cards are stretching their dollars as far as possible in the recession, but they also noted that because no single merchant category accounted for more than 8 percent of the aggregate incentive spend, anticipating individual spending choices was difficult. But, citing the October 2008 Pulse Survey by the Incentive Research Foundation, they noted that prepaid cards are emerging as an incentive option for tough economic times, offering card recipients spending and redeeming flexibility—especially as incentive travel and high-end merchandise could be seen as extravagant.
“The many benefits associated with giving people the flexibility and choice to redeem awards however and whenever they want have quickly transformed these cards into the incentive and reward solution of choice across the country,” said Rubina Havlin, managing director of gift cards for Scotiabank.
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