Prepaid Card Market Explodes Large issuers have long neglected the prepaid card market, which is mainly used by unbanked consumers.

Prepaid cards are certainly one such option Prepaid Card Market Explodes:

But that’s about to change, as the recently passed CARD Act has made it much more difficult for issuers to monetize traditional credit cards, prompting them to start exploring other options.

. Their use is growing rapidly and is predicted to explode in the coming years. The following figures from the Network Branded Prepaid Card Association show how much was loaded on prepaid cards from 2006 to 2009 and supply projections for 2010 to 2012 Prepaid Card Market Explodes:

Annual amount loaded on prepaid cards

2006 $1.8 billion
2007 $3.8 billion
2008 $8.7 billion
2009 $18.3 billion
2010 $36.6 billion*
2011 $67.7 billion*
2012 $118.5 billion*

* Predictions

Source: Network Branded Prepaid Card Association

So the growth potential is clearly there, and issuers certainly love the ability to get around the punitive requirements of the CARD Act. But what makes prepaid cards so attractive to a rapidly growing number of consumers? What exactly are prepaid cards Prepaid Card Market Explodes?

When using prepaid cards, cardholders draw money from the account they previously funded. The difference from using debit cards is that prepaid cards are not linked to current accounts, but draw funds from an account with the bank that issued them. However, unlike credit cards, the issuer does not provide a line of credit to the cardholder, who actually buys their card’s spending limit. When the balance is used up, the card can be recharged.

So prepaid cards are a mix of debit and credit cards in terms of usage. Perhaps their biggest downside, aside from their fees, is that they don’t help consumers build a credit history because there’s no credit to use.

But what about the fees? It is generally accepted that prepaid card users are charged significantly higher fees than both credit and debit card users. The following table shows the fees associated with three different prepaid cards (data from The Seattle Times) Prepaid Card Market Explodes.

Fee Green Dot First Vineyard NexisCard
Purchase Fee $4.95 $39.95 $4.95 (Current Price?)
Monthly fee $5.95 (waived if you put at least $1,000 on your card, make 30 transactions, or set up direct deposit) $6.95 None

Transaction Fees None None $1 per credit transaction;

$1.50 for PIN purchases;

$1.99 for purchases with cash back

$4.95 inactivity fee (assessed after 120 days)
$2.50 ATM withdrawal? $2 $2
$0.50 ATM Balance Inquiry? $1
Denial of ATM withdrawal due to insufficient funds $1
Add money to your card $4.95 for free via direct deposit;

$4.95 via wire transfer

$1 at locations where NexisCard is sold;

adding money by direct deposit: up to 2.5% of the loaded amount depending on the status

Live customer service $3 per call (for questions that can be answered online)
Statement $3 per paper statement $5 per paper statement
Card change $6 $15 $10

1. The card currently charges the fees listed above, but NexisCard President Andrew Siden said the company reserves the right to increase the fees to as high as specified in the cardholder agreement. For example, the purchase fee is listed as $9.95 in the contract Prepaid Card Market Explodes.

2. Free at network ATMs. The company cooperates with the MoneyPass ATM network.

Source: The Seattle Times

So yes, using prepaid cards can be expensive, but it doesn’t have to be. For example, Green Dot cardholders pay $4.95 to get the card and then $4.95 each time they load funds on it. However, all other fees can be avoided, including the monthly fee. Plus, all the big banks will charge you a fee if you make a withdrawal from an out-of-network ATM, and most checking accounts have some kind of catch when it comes to avoiding paying a monthly fee Prepaid Card Market Explodes.

However, this does not mean that the Green Dot card is equal to a full-fledged credit card. It isn’t. However, it is a valid option for consumers who have no other choice.

The global prepaid card market size was valued at USD 1.73 trillion in 2019 and is projected to reach USD 6.87 trillion by 2030, growing at a CAGR of 18.2% between 2021 and 2030. The prepaid cards market is expected to show high growth during the forecast period. , due to the convenience offered similarly to a credit or debit card with the option to allow the end user to set a spending limit according to the budget. Prepaid cards are a plastic alternative to carrying cash and are often called everyday cards.

The covid-19 pandemic has created opportunities for digital and electronic prepaid cards; thereby protecting the interests of businesses and consumers Prepaid Card Market Explodes.

Prepaid cards have replaced cash, checks and other payment cards where consumers or businesses want to use electronic means of payment without linking the payment to a credit or debit account. However, various charges and security issues are expected to hamper the growth of the market.

These restrictions are expected to have less impact in the near future due to the rise in popularity of prepaid cards among teenagers and students Prepaid Card Market Explodes.

Prepaid card market-2021-2030

The prepaid card industry is expected to show strong growth during the forecast period. Key factors driving the growth of the prepaid card market include the rise in demand for cash alternatives, the rise in internet users, and the rise in adoption of prepaid cards due to the addition of funds through multiple channels. Additionally, lack of standardization hinders market growth. Additionally, the increase in unbanked and under banked population is expected to fuel the market growth in the future. However, each of these factors is expected to have some impact on the overall growth of the prepaid cards market during the forecast period Prepaid Card Market Explodes.

The closed-loop prepaid card segment is expected to gain significant share during the forecast period, owing to travelers’ use of it as a temporary payment medium to facilitate currency exchange and instant card-to-card money transfer.

However, the open-loop prepaid card segment is expected to grow at the highest rate during the forecast period as it is cost-effective and used to carry out company-specific transactions. Which offers various advantages such as low risk of fraud, easy availability and low interest charges.

In terms of region, the prepaid card market share was dominated by North America in 2019 and is expected to maintain its position during the forecast period. The major factors driving the growth of the market in this region include increasing adoption of prepaid cards by various workers and favorable government regulations for prepaid cards. However, Asia Pacific is expected to witness the highest growth rate during the forecast period due to increase in applications in retail establishments, governments and corporate institutions and increasing government support in developing Asia Pacific countries Prepaid Card Market Explodes.

Prepaid card market

By offer
The General Purpose Card segment will secure a leading position in 2021 – 2030
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The report focuses on the growth prospects, restraints and trends of the global Prepaid Cards market share. The study provides Porter’s five forces analysis to understand the impact of various factors such as bargaining power of suppliers, competitive intensity of competitors, threat of new entrants, threat of substitutes and bargaining power of buyers in the global prepaid card market Prepaid Card Market Explodes.

Prepaid card market
By type
The closed-loop card segment will maintain leadership throughout the forecast period
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Overview of segments

The prepaid card industry is segmented on the basis of offering, card type, end user and region. By offering, the market is categorized into general purpose cards, gift cards, government benefit/salary cards, incentive/salary cards and others. According to the type of card, it is divided into closed-loop card and open-loop card. By end user, the market is analyzed into retail, corporate, government/public sector. By region, the market is studied in North America, Europe, Asia Pacific and LAMEA Prepaid Card Market Explodes.

Prepaid card market
According to the end user
The retail segment will dominate the market throughout the forecast period
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Competitive analysis
Key players profiled in the Prepaid Cards market report are American Express Company, BBVA USA Bancshares Inc., Brink’s Incorporated, Green Dot Corporation, H&R Block Inc., JPMorgan Chase & Co., Kaiku Finance LLC., Mango Financial Inc., MasterCard , and PayPal Holdings Inc.

These key players have adopted various strategies such as product portfolio expansion, mergers and acquisitions, agreements, geographical expansion and collaborations to increase their market penetration and strengthen their position in the industry Prepaid Card Market Explodes.

Prepaid card market
By region
2030 Asia Pacific
North America
Europe
LAMEA
Asia Pacific to show highest CAGR of 20.1% during 2021-2030
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Analysis of the impacts of COVID-19
The prepaid card market has seen significant growth over the past few years; however, due to the outbreak of the COVID-19 pandemic, the market is expected to witness a huge decline in 2020. This is attributed to the rise of telecommuting and social distancing, which poses a challenge for prepaid cards in retail, businesses and anywhere else. sector for shopping, travel and cash flow Prepaid Card Market Explodes.

All these factors have completely reduced the use of prepaid cards, vouchers and others. It has witnessed that different ways of working bring about different ways of communication. This presents a challenge for businesses to ensure that customers who purchase vouchers in the moment generate immediate revenue Prepaid Card Market Explodes.

For example, on April 16, 2020, Instagram officially announced the addition of its new prepaid card and fundraising tools for stories and profiles, which should give businesses another way to generate income during the ongoing crisis. To overcome these issues, businesses are taking to e-commerce tools and offering discounts on vouchers, including free ‘add-on’ items to vouchers. These reasons are expected to fuel the growth of the prepaid cards market during the forecast period.

The most significant influencing factors

Growing demand for cash alternatives
Several studies have shown that advisors have seen an increase in demand for cashless transactions from clients looking for low-risk investments and higher returns than traditional cash accounts. These prepaid cards minimize the risk of overspending because they limit spending to a maximum balance on the card. In addition, it also provides facilities to load the card through various platforms in a variety of ways, including bank account transfers, direct deposit or cash, online and in person, making the prepaid card a vital choice for  Prepaid Card Market Explodes.

General purpose reloadable prepaid cards are rapidly growing in popularity. Consumers use prepaid cards instead of checking accounts for everyday purchases, ATM withdrawals and bill payments.

Even if you don’t plan to offer prepaid products at your financial institution, you need to pay attention to this market because prepaid cards can directly compete for checking deposit dollars, and it’s only going to get bigger. Much, much bigger. In 2009, consumers loaded $28.6 billion onto prepaid cards. By next year, that number is expected to exceed $200 billion, an increase of more than 600%.

The Pew Charitable Trusts released an extensive study that takes a detailed look at reloadable prepaid cards. The report, “The Magic of Uncertainty: Are Prepaid Cards a Smart Alternative to Current Accounts?” analyzed account agreements, fee schedules and websites for 52 different prepaid cards Prepaid Card Market Explodes Prepaid Card Market Explodes.

Pew claims this sample size represents at least 75% of the total US market. The report offers financial marketers a number of insights that banks and credit unions on both sides of the prepaid game can use as competitive leverage.

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Attack those crazy prepaid fees
The prepaid services market exhibits different fee structures for the different services offered, with most cards having 7 to 15 separate fees. The range of median costs for common fees that Pew tracked, such as monthly fees and ATM fees, was $0.50 to $9.95.

The median cost of most service fees on the 52 prepaid cards Pew studied was less than $3. Prepaid cards also offer some services for free. However, it is not clear between the cards which services are offered for free and which have fees, but the fees are not disclosed. For example, 21% of the cards Pew studied said live customer service calls were free, while the same percentage did not disclose any information about the charge Prepaid Card Market Explodes.

Half of the cards analyzed provided consumers with one or more ways to avoid the monthly maintenance fee. Fifteen cards (29%) either had no monthly fee or charged it only if customers did not use their cards for several days, ranging from 60 to 395. Eleven cards (21%) waived monthly fees for customers who met the minimum amount on their cards each month. For these cards, the median minimum load requirement to waive the monthly fee was $1,000, and the range was $100 to $2,500.

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To avoid ATM fees, consumers can opt for “cash back” when purchasing a PIN at the point of sale. Likewise, consumers can avoid additional fees by viewing bills online. Of the cards Pew studied, all but four would require a fee to obtain a paper statement.

Pew found that although they may not have FDIC insurance, more than 90% of prepaid cards reported that their cardholders’ funds were in fact FDIC insured Prepaid Card Market Explodes.

Pew says the unregulated nature of the prepaid industry is bad news for consumers. For example, prepaid cardholders can be automatically enrolled in “overdraft coverage” without their knowledge – essentially turning a prepaid debit card into a full-fledged credit card Prepaid Card Market Explodes. Only five of the 52 cards surveyed disclosed the availability of overdraft plans and fees. Imagine the surprise and irritation of prepaid card customers when they are surprised by credit fees, especially when the point of prepaid cards is to allow cardholders to “live within their means Prepaid Card Market Explodes.”

Current Accounts Vs. prepaid cards
Current accounts and prepaid cards serve similar purposes in many respects, but offer services through different business models and fee structures.29 Unlike the standardized current account market, prepaid cards differ significantly in terms of services and fees Prepaid Card Market Explodes. In addition, federal consumer oversight and protection laws and regulations do not uniformly cover checking accounts and prepaid cards.

Prepaid card users are often charged by many services, but the cards generally don’t have overdraft plans and associated fees. Additionally, prepaid cards typically do not require credit or credit checks. Accordingly, consumers who are in ChexSystems or who have had other checking account issues can shop
a prepaid card Prepaid Card Market Explodes.

Pew found that prepaid cards often charge fees for common services. These fees included fees for point-of-sale transactions, network ATM withdrawals, and customer service calls. Most bank accounts did not charge these fees. However, in the Pew study, there were several areas where prepaid cards were equal to or better than regular accounts:

Out-of-network ATM fees were similar for both product types.

The median monthly fee for prepaid cards was roughly half that of current accounts.
Overdraft fees, which were ubiquitous on checking accounts, were uncommon on prepaid cards Prepaid Card Market Explodes.

             Sources