Guest Column - March/April 2014

The Broad Appeal of Prepaid

Parago Study Reveals Customer Preference for Prepaid Card Rewards

By Theresa Wabler


In September 2013, we asked consumers to tell us the best way to win their business, and they obliged. Across industries and income levels, the answer was clear: prepaid cards. More than discounts, statement credits and e-cards, people told us they prefer the convenience and flexibility of having a physical, plastic prepaid card in their hands.

Who We Talked To (And About What)

Parago reached out to more than 1,400 consumers, both male and female, ages 18 and older, across income and educational levels. We sent them a 23-question digital survey that described typical shopping scenarios among six categories:

  • Cable & Internet
  • Utilities
  • Auto (new car purchase)
  • Tires
  • Coffee makers
  • Hotel/hospitality

We asked our participants how they most preferred to be rewarded for a purchase, in general, from among seven reward options. Prepaid cards were the hands-down winner. (See Figure 1.)

It's important to note that, in the survey, we highlighted the benefits of each reward option. We wanted to be sure participants who were unfamiliar with the concept of, for example, a digital gift code, understood that it gets delivered instantly and can be redeemed immediately online, or printed out and taken to a brick-and-mortar store. Despite the convenience and instant gratification of electronic rewards, respondents overwhelmingly selected prepaid cards.


Purchase Scenario: New Tires

After asking general reward-preference questions, we got industry-specific. For example, we asked participants to imagine they are in the market for a new set of tires. Two nearby tire stores are offering the same tires, with installation, for the same price. Each, however, is offering a different reward. We asked participants which reward would get them to choose one store over the other. See Figure 2 to learn what they told us.

Across all income levels, more than half of the respondents said the prepaid card was their reward of choice. And look carefully at the options that were presented. Our survey participants selected a reward valued at $50 over one valued at $300.