Prepaid cards are poised for dramatic growth, according to a recent study from MasterCard.
The US had 73% of the prepaid card market in 2010. That share will likely slip to 51% in the coming years, as the rest of the world, including unbanked households in Africa and Asia, adopt prepaid cards for their convenience and security.
In the US today, prepaid cards are popular with unbanked and underbanked households, who use the cards instead of checking accounts for everyday payments.
As more banks and credit unions add products to meet the needs of the 25.6% of US households that are unbanked or underbanked, we can expect to see more branches promoting prepaid cards and screening applicants for prepaid accounts. Especially when serving customers with limited banking histories, institutions need to ensure that funds loaded onto cards are really available and that no fraud is being committed.
Unbanked and underbanked households aren’t the only users of prepaid cards in the US. The MasterCard study points out that prepaid cards are increasingly popular with traditional banked customers, who like the idea of having a secure payment solution that cannot be overdrawn, that is safe to take on trips and vacations, and that makes household budgeting easy.
By 2017, Mastercard expects the global market for prepaid card to consist of $191 billion in corporate payroll payments, $177 billion in government benefits, $152 billion in general-purpose reloadable cards, $56 billion in consumer travel funds, and $55 billion in healthcare payments.
Banks and credit unions should recognize the growth potential of this market, and ensure that their account-opening processes can support prepaid card applications from unbanked, underbanked, and banked clients.
To learn more about Dragnet Solutions services for identity verification and account screening, please contact us.