With the final day of The Prepaid Press Expo, the only trade event today that focuses on the convergence of all prepaid products and services, it is important to look at the ever expanding trends of prepaid cards.
Findings from the 2012 Prepaid Card Report from CardHub.com show, the growth rate for prepaid card transactions was more than 20 percent between 2006 and 2009, according to the Federal Reserve, making prepaid cards the most rapidly growing form of electronic payment during that time. Since that time, interest in prepaid cards has only increased, partly due to debit card regulations that cost large banks $8.04 billion in annual revenue and forced them to emphasize unregulated alternatives such as prepaid cards. Consumers loaded $57 billion onto prepaid cards in 2011, a nearly 33% increase from 2010, and that number is expected to rise by 44% to $82 billion in 2012, according to the Mercator Advisory Group. By 2013, the group predicts consumers will load $117 billion onto prepaid cards, which would mark a 200% usage increase in just three years. A number of major celebrities have also signed on as prepaid card endorsers, speaking to the investment that issuers are making in the product.
What’s Behind the Rise of Prepaid Cards?
Among the driving forces behind this rapid ascent, according to Pew findings, is the desire of consumers to avoid hidden fees associated with everyday banking.
“While participants in the focus groups do not complain about the dollar amounts of the fees,” Pew found, “they are concerned about the fees associated with every aspect of the cards: an initial fee to purchase, subsequent fees for reloading funds, monthly fees, a replacement fee for lost cards, a fee to use ATMs, and a fee to call customer service. Participants are unhappy with both the number of fees and their cost.”
Also, according to Pew’s findings, many consumers [believe prepaid] cards to provide superior fraud and identity theft protection than credit cards and debit cards.
To read the full article, visit What’s Behind the Rise of Prepaid Cards?