Prepaid cards are stored-value cards — often reloadable and function similarly to debit cards. These days they are being used as far more than gift cards and their use continues to increase according to the findings of a recent Mercator Advisory Group survey. Its data shows that more consumers are receiving funds on prepaid cards as rebates, refunds, and incentives now than in recent past years. They are even using prepaid cards for payroll and money transfer purposes./p>
The Insight Summary Report based on findings from the Customer Monitor Survey Series reveals nearly 3 in 5 U.S. adults bought prepaid cards in 2014 and 2 in 3 young adults (aged 18-34). The prepaid buyers are not only an increasingly younger population than in years prior, but are also increasingly mobile enabled. Today, prepaid cards serve the smartphone and tablet owners who have paid for goods and services by mobile phone. They are often a primary payment vehicle for mobile purchases./p>
The author of the report has stated the attraction of prepaid cards by many U.S. consumers is to use them as a money management tool — even if they have a checking account. Part of the appeal of prepaid cards is how they let cardholders control their spending. Cardholding consumers can make electronic payments from funds they set aside, without accruing debt from credit cards or attaching their bank account to the transaction by using prepaid cards./p>
Open-loop gift cards, unlike closed-loop gift cards, can be used at any location that accepts the major card brand. Closed-loop cards can only be used in a single store or group of stores. The survey found that general purpose reloadable (GPR) gift cards and non-GPR gift cards are the two fastest growing segments of prepaid. This may have something to do with the shifting consumer demographics./p>
Originally, prepaid cards were intended to serve consumers who could not qualify for a credit card (or chose not to have a bank account/credit card). They tended to be lower income earners. Now, higher -income earners (household income $100,000 or more) are more likely to buy GPR cards than in previous years. Mercator Advisory Group forecasts prepaid cards will be more broadly used by American consumers as open-loop prepaid cards become available everywhere and begin to offer more services once provided only by financial institutions. It’s expected that consumers will continue to use them as a money management tool that offers privacy, convenience, and enhanced security./p>
Contact a TransFirst® representative if you’d like to learn more about prepaid cards or any of our credit card processing products and merchant services. We can help you find the best solutions to meet the needs of your business.