Prepaid cards are witnessing a fast rise in popularity, with the global market expected to grow to $535bn by 2020[1].
Prepaid Cards: Opening up a new world of financial possibilities
What was once seen predominantly as a tool for promoting financial inclusion among the unbanked and underbanked population, has now evolved to a payment method that delivers convenience and security to consumers across a wide range of sectors – writes Graham Perry, President of MasterCard Prepaid Management Services.
Increasingly savvy holidaymakers, for example, are constantly on the look-out for the best deals to manage their money and take the stress out of travelling. The increased security and convenience of travelling with a prepaid card certainly caters to this need, but the advantages of prepaid cards go far wider than this and include the potential for worldwide acceptance and budgeting benefits, both of which are highly valued by consumers.
Recent research[2] demonstrates 77% of cardholders are extremely concerned by false declines when travelling, and budgeting has become ever more important since the global economic crisis and conservative spending behaviour that’s followed.
It comes as no surprise, then, that as a result of the value prepaid cards have already delivered to the travel industry, we are seeing their usage spread to other areas of consumer life.
Improving the customer experience
Today’s consumers demand choice, speed, convenience, flexibility, control, and above all, peace of mind that their money is safe and secure. To compete effectively in this environment, it’s vital to put these needs at the heart of any product offering while ensuring consumers have the best possible experience every time they make a payment.
Prepaid cards can meet these needs and are a much better alternative to cash.
For travel enthusiasts exchange rates can be locked in at the time of loading money onto a prepaid card, so consumers can choose to buy currency at the most fortuitous moment and make their money go further whilst travelling abroad. Prepaid travel cards can also be used to spread the load, enabling travellers to distribute their travel money across multiple currency options.
To control budget, prepaid cards can be loaded only up to the amount the consumer is willing to spend during their trip.
But the buck doesn’t stop with travellers; the convenience and practicality offered by prepaid cards, coupled with their safety and security, mean prepaid products are gaining popularity across multiple other industries including retail, finance, and airlines.
The reason is simple: heightened awareness of fraud and data breach threats have encouraged consumers to proactively manage their own fraud risk. Due to the nature of how prepaid cards work, they are an attractive option. If a prepaid card is lost or stolen, as there is no link to a user’s bank account, there is no risk of fraudsters accessing any further funds. And, as a further precaution, prepaid cards can even be blocked remotely to put an immediate freeze on any unwanted transaction activity. This offers consumers peace of mind and ensures the delivery of a frictionless service as they go about their daily lives.
New payment possibilities
Aside from increased safety and security, prepaid cards can also easily integrate into other existing programs. The case for this is particularly strong when we look at the retail sector, where prepaid card programs can be bundled with loyalty programs to help drive loyalty and revenue, and simultaneously decrease the operating costs associated with handling cash.
Beyond this, we are also seeing an emergence of prepaid products across non-traditional sectors and audiences: music festivals, for example, have been debuting dedicated prepaid cards to simplify the payment experience at events and help festival goers keep their money safe from theft or loss; of course, from a consumer perspective, a prepaid card will also allow attendees to better manage their spending while at the event.
There has also been a spike in usage by local government as they seek agile prepaid card programs to better serve the needs of the payment needs of their citizens in a way that goes beyond financial inclusion.
Partnering to win
Though opportunities are plenty, navigating the prepaid payments environment requires investment, market and industry knowledge, and payment expertise. As such, for those looking to capitalize on the opportunity, forging solid partnerships with industry experts is crucial and must not be overlooked.
Working with an established provider that can manage the programme from end to end, while offering world-class security, reliability, convenience and innovation, will help ensure delivery of an enhanced customer experience, and offer the best chance of success.
[1] Euromonitor International Consulting Group
[2] RTi Research, August 2016
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