Seeking More Capacity, AmEx Turns to eFunds for Prepaid Processing

Payment processor eFunds Corp. will take over the processing of American Express Co.'s fast-growing retail and gift card portfolio in 2007 and 2008 under a deal announced Wednesday. The deal, financial terms of which were not released, is the biggest prepaid contract to date for Scottsdale, Ariz.-based eFunds, which focuses mostly on the debit card and ATM processing and support-services markets. AmEx wouldn't disclose the size of its prepaid card portfolio, but says sales of its gift cards have more than doubled every year since 2002. “It's a lot of cards,” says an eFunds spokesperson. AmEx currently processes its gift cards and other prepaid offerings in-house. A spokesperson tells Digital Transactions News that AmEx needed more capacity to support its “surging volume. We were facing a choice of build it ourselves, expand it ourselves, or go with a partner that had an existing platform.” The spokesperson didn't say exactly how AmEx chose eFunds, but says that company “is clearly a leader.” EFunds ramped up its presence in the prepaid market last year when it bought a leading prepaid card processor, WildCard Systems Inc. (Digital Transactions News, June 9, 2005). The former WildCard platform is now the core technology of eFunds Prepaid Solutions, a subsidiary of the parent company. Under the deal, eFunds will take operational responsibility for transaction processing, including authorizations, card activation, and account maintenance. AmEx's prepaid card programs include cards issued in conjunction with such major shopping mall developers as General Growth Properties Inc., Taubman Centers Inc., The Westfield Group, and CBL & Associates Properties Inc. The pact also covers AmEx retail gift cards, bank gift cards, online gift cards, the Travelers Cheque Card in the United States, United Kingdom, and Germany, and cards issued by American Express Incentive Services, a joint venture of AmEx and Fenton, Mo.-based loyalty and marketing services provider Maritz Inc. AmEx's gift cards include themed products under the names of Especially for Kids, Especially for Teens, and Especially for Birthdays. The AmEx spokesperson says the mall gift cards will switch to the eFunds platform first, in mid-2007, followed by the rest of the portfolio in 2008.