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First Data report: Year-over-year surges

Atlanta -- A report released Monday by First Data Corp., which tracks year-over-year same-merchant activations, redemptions and reloads of merchant-branded prepaid cards in the United States, including spending, gift, incentive and promotional cards, revealed that delayed post-holiday redemptions and incentives drove activations in first quarter 2011.

According to the First Data SpendTrend Closed-Loop Prepaid Cards analyses for the first quarter, in January, year-over-year activations surged as merchants enticed consumers with gift card incentives. Post-holiday redemption rates slowed, likely due to a succession of winter storms across the country. Redemptions rebounded with double-digit growth in February as consumers took advantage of milder weather to seek out seasonal bargains. March overall dollar volume growth of activations, redemptions and reloads posted strong double-digit increases.

According to the report, specialty retailers drove strong activation growth in January and March. In January, these retailers offered gift card incentives attached to the purchase of a particular product. Increased gift-card activity at electronics & appliance stores, as well as usage of online and mobile gift cards drove an increase in dollar volume and average tickets at specialty retailers in March.

During the first quarter QSRs continued to propel much of the growth in transaction and dollar volume of reloads. Specialty retail and casual dining saw a double-digit growth in average ticket size of reloads.

“Gift cards continue to grow as a favored of payment form among consumers. Redemption and reloads have shown strong, steady growth during the first three months of 2011,” said Silvio Tavares, senior VP and division manager of First Data Information and Analytics Solutions.

Overall, activitions were up 11.7% in January, up 4.3% in February and up 9.3% in March. Redemptions were up 4.2% in January, up 10.7% in February and up 13.1% in March. Reloads were up 28.2% in January, up 26.2% in February and up 27.6% in March.

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