The Bancorp’s investor presentation dated October 29, 2020 reported a 39% increase in gross dollar volume for its prepaid and debit offerings in the third quarter compared with the same period in 2019. Gift programmes were one of several uses identified within the issuing business. [S01]

Two businesses, different roles

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Two businesses, different roles

Third-quarter 2020 measure

Payment Solutions Group

Payment Acceptance Group

Average deposits

$4,038 million

$835 million

Non-interest income

$19.4 million

$1.8 million

Role described

Prepaid and debit issuance

Merchant acquiring and payment processing

The presentation listed government, healthcare, payroll-related corporate services and challenger banks alongside gift programmes. It also described more than 100 million prepaid cards in US distribution. Neither that distribution count nor the 39% growth figure was presented as a gift-card-only measure. [S01]

Reading the figures without changing their scope

Gross dollar volume measures payment activity. It is not the same thing as revenue, customer deposits or the value of gift-card balances outstanding. A gift-card market estimate cannot be derived by applying the reported growth rate to all of the bank’s prepaid cards.

The deposit and income figures also answer different questions. Average deposits describe funds held over the reporting period, while non-interest income records earnings from the relevant business activity. They should not be plotted as though they were interchangeable measures of customer spending.

For the gift-card industry, the presentation is evidence of how one issuing bank situated gift programmes within a larger payments operation. That context helps explain why a bank-level growth announcement can be relevant to gift cards without measuring the gift-card segment separately.

All figures in this article refer to the 2020 presentation and its stated reporting periods. The document also included forward-looking targets, which are not treated here as achieved results.