Aug 09, 2013 Dave King
Electronic payments, especially prepaid cards, have continued to become more popular among a variety of demographics, including millennials, underbanked households and teenagers. However, while companies need to consider launching an electronic payments strategy to remain competitive in the highly digital landscape, there are several missteps that need to be avoided for optimal performances.
When it comes to prepaid cards, the industry is ripe for growth so long as providers can come up with strategies that walk the line of simple bank accounts and alternative financial products. Most prepaid card users want the option to separate themselves from the traditional banking system and its myriad costs, fees and other headaches, so these products must be made simple to truly burgeon.
Avoid hidden fees
NY1 recently reported that while prepaid cards are generally more convenient, some providers are increasing fees too much and experiencing financial shortfalls as a result. Hidden charges can be a devastating blow to the success of a prepaid card strategy, and vendors need to remember this when working out the details of their offerings.
According to the news provider, prepaid cards were used to complete $77 billion worth of purchases, accounting for 1.3 billion transactions, in 2012. Analysts believe this number will continue to climb in the coming years, especially as more millennials and other young consumers begin to make more purchases with the products.
"A prepaid debit card is an option for someone who doesn't want to have a bank account or who doesn't want to deal with banks," Norma Garcia of the Consumers Union told the source. "It's an option for someone who wants flexibility, or sometimes people give their children prepaid debit cards to control their spending, or for people who want to budget their spending."
No matter what the cost, prepaid card providers will need to keep hidden fees to a minimum to ensure prolonged success.
Low-risk, high reward
The Columbus Dispatch recently reported that some prepaid cards come with high risks, especially when vendors do not pay attention to fraud protection and data integrity. Vendors should always offer options to consumers who want an added level of security, especially those who are using prepaid cards to conduct regular, high-price transactions.
Since unbanked and underbanked households use the products in place of traditional accounts, their data must be protected from the grasps of identity thieves, hackers and other cyber criminals. More secure cards will provide the vendor with higher rewards.