The reason behind the sudden proliferation of prepaid calling cards in the telecommunication market is the degree of convenience that they impart on consumers. One doesn’t have to bring those messy coins just to use the pay phone; one prepaid calling card is all that is needed. Phone bills are gotten rid off as well since the calls that one is going to make through the prepaid calling card has already been paid for. Prepaid calling cards have been around Asia and Europe for quite some time. Another reason for the fast rising popularity of prepaid calling cards is the facility that allows a consumer to regulate calling times in order to save a lot of cash on a monthly basis. Since one can make only a preset number of calls equivalent to the monetary value of the card, the worry of running up a phone bill eventually reaching to surprising amounts is eradicated. One also needs not to have a good credit history to acquire a prepaid calling card. There is no need for deposits as well; just pay for the card and one is ready to make calls.

The PELORUS Group reported about the surge of revenues in the prepaid calling card market over the United States and Canada between 1995 and 2000. The prepaid calling card market sales increased from $750 million to over $3.3 billion in a matter of 5 years. Domestic and international components of the market simultaneously rose during this period. However, between 2001 and 2002, the prepaid calling card market in North America decelerated. It was during this time period that domestic prepaid calling card revenues declined. Nevertheless international prepaid calling cards continuously enjoy increasing revenues. With the escalating popularity of international calling cards, the total prepaid calling card revenues managed to bounce back to about $3.2 billion.

International calling has been made affordable to a larger segment of the population by rates the have lowered sharply in recent years. The drop in rates has been sparked not only from the intense competition among prepaid calling card vendors, but also from the escalating competition from other telecommunication modalities and Internet telephony or VoIP, which foreign carriers have been struggling to keep up to. But this has consequently generated a higher degree of acceptance among consumers. Hence, call time has grown to more than counterbalance the detrimental effect of revenue erosion due to lower rates. The net result is a higher gain in revenues even as some sectors of the market, such as domestic calling, have receded.

The same report projects a gradual decline in domestic prepaid calling card revenues starting from 2003 all the way up to 2008. On the contrary, international prepaid calling card revenues are positively foreseen to boost by almost 33%, climbing to an estimated total of $2.75 billion in 2008. By 2008 the size of the international market will more than double the corresponding size of the domestic market.

However, the promising industry of prepaid calling cards is not impervious to problems. For instance there is a diversity of opinions regarding rechargeable cards. The prevailing issue is concerned with the fact that retailers do not agree to sell rechargeable cards because the sale will be a one-shot deal. The counter argument asserts that rechargeable cards actually render extra revenue from the recharge residual fees to retailers.

Vending machines are becoming the fastest-growing method of merchandising. Retailers can benefit from enhanced security this method of retailing provides. Furthermore, it also requires lower inventory needs as well as no employee involvement.