Consumers typically receive rebate payouts through prepaid cards or checks. Soon they also will have the option to have the funds deposited directly into a PayPal Inc. account.

Parago Inc., a rewards-program provider, says its merchant partners soon will have the ability to offer consumers rebate payouts through PayPal instead forcing them to wait for such payments to arrive via paper check or prepaid card.

The PayPal option is intended to be more eco-friendly and to give consumers more choice in how to receive rebate payouts, Juli Spottiswood, Parago president and CEO, tells PaymentsSource.

“If we can offer consumers choice and have a vast array of reward choices, then that’s going to serve our clients well in their relationship with their customers,” she says.

Parago has yet to announce which merchants will offer the PayPal option, but the Lewisville, Texas-based company works with such retailers as Ace Hardware Corp. and Staples Inc.

Prepaid cards remain the most sought-after rebate payout option, according to industry research.

In March, an Aite Group LLC survey predicted incentive and loyalty cards would have the highest compound annual growth rate, 39%, in the next four years compared with 12% in 2009 (see story).  Retailers increasingly are using prepaid types of cards to increase sales, reward loyalty and shape consumers’ behavior, the report said.

Retailers have loaded more than $2.5 billion into rebate card accounts during the past five years, and 95% of consumers say they definitely would or may choose a prepaid rebate card over other options such as checks, according to research cited by the Network Branded Prepaid Card Association.

Spottiswood does not expect the PayPal option to overtake prepaid cards, but Parago’s internal research suggests more than half of consumers have a PayPal account.

The PayPal option “is not going to be for everyone,” she says. “But surely PayPal accounts are growing day by day.”

PayPal officials were unavailable for comment.

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