Why would traditional, retail-delivered, physical, prepaid cards be seen as a big opportunity, especially for a virtual or online service? There are a series of good reasons:
- There are tens of millions of US consumers who don't have credit cards, including almost everyone under the age of 21 under the most-recent credit card laws
- Many consumers are still not comfortable using PayPal
- Prepaid cards avoid the costly issue of chargebacks that occur frequently with credit card use online
- Advertising Cost-per-acquisition offers can have issues, as seen in the recent "Scamville" series
- The US is years away from being a mobile-billing dominant country as has occurred in Europe
Delivering an easy to use, easy to find, cash-like instrument can provide great benefit to both consumers and interactive entertainment publishers.
Demand for virtual goods continues to grow and the audience for these goods has money to spend -- but until now had no easy way to spend it. Even today, with a limited set of prepaid cards available at roughly 50,000 stores, the prepaid market share is estimated to become 15% of virtual goods revenue in 2010, or $150M+.
There are over 200 single-publisher cards in the marketplace, but most retail stores carry only 12-24 of them. Shelf space is crowded and confusing -- for both interactive entertainment publishers to get distribution for their individual cards as well as for consumers to find and purchase those cards.
Zeus created the STi Prepaid card service to address this growing market by solving for these challenges.