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Capitalizing on prepaid popularity

Apr 04, 2013 Dave King

As a result of the economic fall out, many Americans began to distrust the financial industry, especially the biggest banks. This led to the rise in popularity for a variety of alternative financial services, while enterprises continue to roll out new electronic payments strategies, such as prepaid cards, to capitalize on the major shift away from big banks.

Prepaid cards are among the best ways to reach the unbanked and underbanked populations in the United States, while both of these categories have continued to expand in the past several years. Business owners should consider launching prepaid card strategies to capitalize on the increased popularity of the payment method, as many who have already done so are enjoying higher profits.

Where is prepaid heading?
Convenience Store Decisions recently reported that the prepaid card market is ripe for growth in the United States and abroad, as popularity among consumers, especially younger individuals and parents, has burgeoned in the past several years. The younger generations continue to make up more of the consumer base, while these demographics are less likely to have traditional credit or debit card accounts.

According to the news provider, the Mercator Advisory Group's latest research indicated that the prepaid card market is being driven to new heights, though the potential for new regulations might impede the exponential growth. Regardless, the organization's Prepaid Card Market Forecast projects the U.S. prepaid card market to reach more than $281.7 billion this year.

The source added that growth in the market is also leading to several shifts in strategies and policies, while many consumers are beginning to enjoy more preferable terms and conditions on the cards.

"As point-of-sale technology becomes more prevalent, prepaid loyalty/reward initiates become more available, either as a standalone product or as an added feature to an existing prepaid gift card," Tom Gilbert, of one financial firm, told Convenience Store Decisions.

Taking a step ahead
Some of the most innovative and progressive strategies to boost prepaid card sales have been the most successful in recent years. Consumers are looking for cards that stand alone, both regarding the perks and the conditions. Now, Ubergizmo recently reported that Nintendo has rolled out a line of prepaid cards that are interactive, which many believe will drive its popularity among younger consumers and parents.

According to the source, the Nintendo cards will be first released in Japan this April. Businesses planning to roll out new prepaid card options should consider incorporating strong marketing strategies to drive visibility and popularity in target markets.