Cutting-Edge Printing--From Utility to Novelty

By Tara Seals

Posted: 06/2000

Cutting-Edge Printing–From Utility to Novelty
By Tara Seals

When prepaid phone cards first appeared in 1993 in the U.S. market, printers greeted the lucrative new trend with offers to laminate cards with four layers of baked plastic. The result was a high-quality look with credit card-like rigidity.

While this method was tailored perfectly to the booming collectible market of the time, today a more mature, less novelty-oriented industry has seen the emergence of two distinct markets that demanded changes in the printing processes.

The mass-produced, less expensive cards are targeted towards retail applications. Their primary purpose is to package minutes. They are the result of the competition for long-distance rates, which forced card makers to bring their costs down.

New limited-run applications, however, still demand a high-quality card and offer refuge for the smaller and specalty printers.

Retail Rules

“The phone cards went from being a collectible curiosity to being a retail item,” says Russ Herman, general manager for Allegheny Printed Plastics
(www.allegheny.com). “Back then, you’d get an order for 5,000 [cards] that had to be very high quality because they were being collected. Now you’re more likely to get an order for half a million cards that are going to be retailed at a convenience store. So the various emphasis on quality, price and delivery all changes a little.”

With a growing retail market and falling long-distance costs per minute, card manufacturers are looking for ways to avoid putting money into the card or its packaging, according to Standard Register’s
(www.standardregister.com) Susan Krause, manager of the print on demand division.

“If your sole intent is just to sell the minutes, and you’re in an area where that’s a highly sought-after item, you’re probably not going to put a lot of money into the card,” she explains. “In ethnic neighborhoods where the cards are specifically designed to sell to a specific country at a low cost, you’ll even see perforated tear-off cards.”

Advances in presses and other machines allow card manufacturers to combat downward pressure. Implementation of new printing processes has resulted in more cards in less time. The continuing benefit of a lower cost per piece far outweighs the expensive equipment investment, Krause says.

One of the cutting-edge technologies within the industry is a six-color UV printing press. This allows a print run on thinner kinds of plastic.

Also, large inkjet machines that imprint the personal identification number (PIN) or other information can handle 20,000 to 30,000 cards per hour.

Hot stamping and foil machines that apply scratch-off panels over the PINs are capable of printing on thinner plastic without causing warping.

Paper cards, which are imprinted, laminated and then die cut, save considerable expense in longer runs.

Some companies, such as Arthur Blank & Co.
(www.arthurblank.com), have developed proprietary systems for imaging PINs and encoding magnetic stripes.

Pentagon Graphics Ltd.
(www.pentagongraphics.com) recently purchased a new item called a Flexo-Press, which allows both sides of the card to be printed at the same time while applying a protective coating; the die cutting can be done on the press as well.

Future plans call for numbering and scratch-off applications, so the card leaves the press as a totally finished product. This already has cut the turnaround time from 14 to nine days.

“Otherwise, there’s no way to get the quick turnaround that’s demanded in this industry,” says Harvey Caron, vice president for Pentagon Graphics.

PoSA Prerequisites

PINs are covered with scratch-off panels or protected by elaborate packaging, conveying a security concern for the retailer and the printer. Printers often have rigid internal security measures to safeguard against PIN theft, such as cameras over the presses, a shredding policy and password-protected printing presses.

The cards’ packaging either reflects an antitheft device or allows them to easily be kept in a cash drawer. Thin cellophane wrap, blister packaging or a “dollar bill style” that fully encloses the card in a paper package are the most common.

Of course, at the printer’s end, the bulkier the packaging is, the higher the production and shipping costs.

Point of Sale Activation (PoSA) is a newer trend within the retail arena that has ramifications throughout the printing industry in terms of cost reduction. As the activation of a card with a magnetic stripe at the time of purchase becomes more common, protective packaging and plant security measures will no longer be much of a concern.

The printer will not be printing “live” cards. This eliminates expense and allows more flexibility for manufacturers in the low-margin retail market.

Although it is contingent upon retail stores having the proper equipment for PoSA, cards increasingly are coming out from behind the counter, creating a new market for impulse purchasing and offering promotional message space.

Reflective of this is the hanging card, a die-cut plastic or paper card for display in supermarket aisles and other retail settings. The card eliminates packaging concerns and can be die cut in a variety of shapes, such as a telephone, a basket of fruit–even a Coca-Cola bottle.

Chart: Phone Card Printers

Pentagon Graphic’s Caron says, “The hanging card right now is the most popular card on the market for two major reasons: One, it gives the owner of the card a lot of space to do promotion; and two, it is the least expensive card to produce and ship.”

Premium Promos

The retail market is an opportunity for card manufacturers, and promotional cards are becoming a popular application. Rather than being a vehicle for selling minutes, this concept focuses on printing quality and customization. They also often carry shorter runs, all of which offer a source of additional revenue for card manufacturers. Those who issue the customized cards are willing to pay more per card because of its perceived value.

Allegheny’s Herman explains, “One thing that’s given the phone card some renewed life for us is that they end up being premium giveaways with other products–phone cards that are packaged with candy bars, boxes of cereal, and we’re working on a project now where there’s a phone card that’s going to hang around the neck of a juice bottle. So they’re giving phone cards away as promotional items, and that’s a new angle that’s been pretty good for us over the past year.”

The niche also attracts smaller printers, whose ability to customize and quickly match fluctuations in the market can be an asset.

“We give them a personal thing that they’re not going to get anywhere else, at a reasonable figure,” says Don White, president of P.P.P. Communications
(www.prepaidphonecardusa.com).

Focusing on fund-raisers, personalized Christmas cards, wedding and birth announcements, sporting events, regional ethnic populations and other focused applications for which they can charge a premium, small printers can tailor each run for their customers while keeping the cost structure in line.

Larger printers can’t compete if a customer is looking for a small run because of the processes involved in setting up plates and die cuts on large machines.

Jim Saffron, president of NovaCard
(www.novacard.com), says, “Our philosophy, not just with this product but with all products that we produce, is we specialize in small quantity, personalized custom products. Things change so quickly. I’m not interested in doing a half a million cards. I don’t even really compete for 50,000 cards. I will do 50 cards up to maybe 10,000.”

The small market heralds a new process: Digital printing. Card characteristics are imaged digitally onto the card, direct from a desktop. The economies of scale are such that in larger runs the time it takes to imprint the card makes the cost prohibitive. However, for runs under 50,000, the process gives good quality and quick turnaround with no expensive prints, plates or films.

“Part of making a phone card is the personalization,” says Gordon Kramer, president of Continental Plastic Card Co.
(www.continentalplasticcard.com). “The plateless part of the personalization in digital printing means you can do the personalization at the same time that you’re making the card. So there’s some theoretic savings.”

Elastic Plastic

Printers must remain flexible to change with the market oscillations. For many that means branching into other areas. A heightened awareness of phone cards as an accepted vehicle for service has aided that transition.

“The fact that phone cards are so widely accepted now has opened the way for gift cards,” says Paul Blanchard, marketing manager for Arthur Blank. “Phone cards are still lucrative, but we have a very diverse group of markets that we service beyond that. We’re very involved in a lot of other prepaid card products.”

In the high-demand, low-margin retail arena, PoSA has opened the way for lower cost processes, and new innovations in equipment have aided competition in the intensely fierce marketplace.

The promotional arena offers higher margins and opportunities for customization and niche marketing. New plastic card applications made mainstream by the acceptance of phone cards offer even more advantages. The future of phone card printing is in diverse realms and will remain a lucrative industry, according to Krause.

“I definitely think we’ll see some increases in the whole prepaid card industry,” she says. “Phone cards have been around for almost a decade in the U.S., and I don’t think we see any sign that it has peaked or [is] declining.”

Tara Seals is agent channel editor for PHONE+ magazine.