Trends to Watch: The Growth of Prepaid Cards

Intevacon recently made its Prepaid Card available to marketers, and we couldn’t be more excited.  The Prepaid Card empowers marketers to offer customers the ability to pay with cash but have the convenience of a payment card.  In addition, the marketer can use the Prepaid Card as a tool to offer discounts as an incentive for using cash as a method of payment.  Of course, every marketer understands the value of cash payments.  With cash payments, especially cash payments loaded onto a card for future purchases, the marketer is able to increase cash flow, eliminate swipe fees, and encourage future purchases.

The Prepaid Card solution seems to only be gaining ground in popularity as an alternative to the credit card.  Read a few recent statistics below:

Prepaid card use is growing nationally and globally:

  • Global prepaid growth is expected to grow at an annual rate of 22% through 2017, reaching $822B.1
  • As of March 1, 2013, the US government started enforcing a law requiring social security and other government benefits be paid electronically either as a direct deposit or onto a prepaid card.2
  •  Corporations have started utilizing prepaid cards as an alternative means for paychecks, meal vouchers, and healthcare reimbursements.  The result is a reduction in fraud, processing costs, and the carbon footprint of using paper.  The total commercial prepaid opportunity is projected to reach $325B  by 2015 globally.1

Your customers are great candidates for the Prepaid Card:

  • 8.2% of US households are unbanked. This represents 1 in 12 households in the nation, or nearly 10 million in total.3
  • 20.1% of US households are underbanked. This represents one in five households, or 24 million households.3
  • 25% of households have used at least one Alternative Financial Service (AFS) product in the last year, and almost one in ten households have used two or more AFS. In the last 30 days, 12 percent of households used an AFS product.3
  • The general population also views Prepaid Cards as smart cash.  Approximately 48% of the global prepaid open loop opportunity lies within the general population of banked consumers looking to segment their spending on top of their existing payment cards.1
  • Millennials are also quickly adopting prepaid cards as a preferred method of payment.  In June 2013, USA Today reported the results of a survey of more than 1,000 people ages 18 to 34 finding that while 92% currently use a bank, 45% say they have also used outside services including prepaid cards, check cashing, pawn shops and payday loans.4
Resources:
  1. “2012 Global Prepaid Sizing Study, Commissioned by Mastercard: A Look at the Potential for Global Prepaid Growth by 2017.”  Advancing Insights, Advancing Commerce. July 2012.  Web. Sept 2013. https://www.partnersinprepaid.com/pdf/a-look-at-the-potential-for-global-prepaid-growth-by-2017.pdf?maincategory=TOPICSsubcategory=RESEARCH
  2. “US Treasury Requires Electronic Federal Benefit Payments.”  Go Direct. Web.  Sept 2013.  http://godirect.org/
  3. Burhouse, Susan and Osaki, Yazmin. “2011 FDIC National Survey of Unbanked and Underbanked Households, Executive Summary.”  FDIC. Sept 2012. Web. Sept 2013. http://www.fdic.gov/householdsurvey/
  4. Malcom, Hadley. “Millennials Big Fans of Prepaid Cards, Payday Loans.” USA Today. June 13, 2013.  Web. September 2013.  http://www.usatoday.com/story/money/personalfinance/2013/06/13/millennials-banking-alternatives/2408861/

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