Prepaid Still Growing
In a recent report titled, Prepaid and Gift Cards in the U.S., research firm Packaged Facts said that prepaid payment volume will jump more than 22 percent this year to $247.5 billion on nearly 10 billion transactions, compared with $202.2 billion in 2011.
Dissatisfaction with banks and regulatory changes affecting debit cards were two reasons for the rise, according to an article in MediaPost magazine.
According to Packaged Facts publisher David Sprinkle, card companies must increase customer retention, format card programs to serve the un- and underbanked, and build relationships with younger consumers, whose limited banking needs and mistrust of banks make them likely prepaid users.
Prepaid card issuers must also solve the problem of high product abandonment compared with bank accounts, which tend to have a low rate of churn. The article suggested that one way to increase loyalty and use might be to encourage customers to opt for direct deposit of their paycheck to a prepaid card.