| Since their emergence as the newest product of the | | | | only be used at one specific place of business such as |
| financial industry in the early '90s, stored value cards | | | | a mall or small business.The popularity of closed loop |
| (SVCs) have become the fastest growing financial | | | | SVCs led to the development of "open loop" cards |
| product on the market.The first SVCs were introduced | | | | that are functionally similar to debit or credit cards. |
| by select retailers that issued them as gift cards; | | | | Often sporting the Visa, MasterCard or Discover logos, |
| essentially electronic gift certificates. With a gift card, | | | | open loop SVCs can be used to make any purchase |
| the only cost to consumers is the exact dollar value of | | | | from any retailer that accepts credit cards. Their more |
| the funds they place on each card. These first SVCs | | | | flexible spending allowances have led to open loop |
| were known as "closed loop" cards, which could only | | | | SVCs becoming the leading SVC in use today.As an |
| be used to make purchases from the retailer that | | | | estimated $38-$45 billion industry in 2003, the SVC |
| issued the card. For example, a Sears gift card can | | | | industry is projected to account for $72 billion in |
| only be used at any Sears store worldwide.Other | | | | transactions for 2006 alone. There are an estimated |
| closed loop cards include SVCs that can only be used | | | | 2,000 SVC programs in existence today with 20 million |
| to purchase specific goods or services, such as gas | | | | potential users. |
| cards or medical insurance cards, or cards that can | | | | |