Pre-paid cards set to skyrocket

Posted by Mark Brousseau

Pre-paid cards are primed for explosive growth in the coming year, according to a survey conducted by Firstsource Solutions.

Fifty percent of payment industry professionals surveyed expect wider adoption of pre-paid cards as more consumers move away from credit cards and cash. Nearly 30 percent of respondents said that more consumers would become “loaders” (i.e. depositing more money to their pre-paid accounts).

“We’re seeing a growing interest in pre-paid cards in consumer segments that weren’t originally drawn to using such a form of payment,” says Tim Smith, senior vice president, Banking Financial Services & Insurance, Firstsource. “Our findings support recent research about the upward trend in the pre-paid market which shows that an estimated $37 billion was loaded onto prepaid cards last year, compared to $18 billion in 2009 and $9 billion in 2008.”

Survey respondents indicated that there is a huge opportunity for the pre-paid market to expand its customer base beyond the most likely consumer targets. More than 40 percent indicated that increased scrutiny from regulators regarding loading and set-up fees will pose the greatest risk to the industry. Additionally, 47 percent said educating card holders on the nuances of a pre-paid will be critical to successful adoption and overall growth in the market.

Firstsource’s survey also examined sentiment on the current regulatory climate in the payments industry. While Dodd-Frank was top-of-mind for 45 percent of payments professionals, the Consumer Financial Protection Act has fallen off the radar for most industry executives (only 9 percent of respondents indicated it was currently a priority issue).

What do you think?