New research reveals details of prepaid card industry
Oct 28, 2012 Sean Albert
In recent years, alternative financial services have become increasingly popular among the general population, likely because of the large fees associated with traditional banking products. The prepaid card industry has exploded, as more unbanked and underbanked households continue to begin using the plastic product. As more businesses and financial institutions roll out prepaid cards, consumers are getting more options everyday, leading to fierce competition in the industry. Organizations that have not yet considered either offering their own prepaid cards or accepting them at the point of sale are putting themselves at a disadvantage. Fees assessed by new study
The Financial Brand recently published the results of a Pew Charitable Trusts report that analyzed more than 50 different prepaid cards to try and gauge the average fees in the industry, as well as adoption rates. According to the study, many prepaid cards have far lower monthly and annual fees than debit and credit accounts. Further, ATM and point of sale fees tend to be lower than $3 across the prepaid card industry, which is a competitive rate when compared with traditional bank services. However, The Financial Brand noted that because of the novelty of prepaid cards, the rates are far more variable than with traditional checking accounts, which are highly standardized. Other prepaid card advantages the Pew study found included lower out-of-network ATM fees, a lack of overdraft penalties and roughly half the annual costs of traditional checking accounts. The study revealed that consumers prefer prepaid cards because they make it easier to budget and eliminate the danger of overdrawing an account. Finally, The Financial Brand noted that the anonymity of prepaid cards is a savory perk for consumers, as many choose to use the cards in situations where they do not want to disclose personal banking information with an organization, such as utilities companies. Consumers view prepaid cards as a method of keeping their data secure. Federal Reserve, others review prevalence of prepaid cards
CardHub recently released a 2012 study of prepaid cards, which analyzed statistics and other data from the Federal Reserve, Mercator Advisory Group and other organizations. According to the news provider, prepaid card transactions increased 20 percent between 2006 and 2009, which was the fastest growth rate for any electronic payment service. Further, the source noted that the Mercator Advisory Group projects the industry will grow by 200 percent between 2010 and 2013, increasing to $117 billion in transactions by next year.
The Financial Brand recently published the results of a Pew Charitable Trusts report that analyzed more than 50 different prepaid cards to try and gauge the average fees in the industry, as well as adoption rates. According to the study, many prepaid cards have far lower monthly and annual fees than debit and credit accounts. Further, ATM and point of sale fees tend to be lower than $3 across the prepaid card industry, which is a competitive rate when compared with traditional bank services. However, The Financial Brand noted that because of the novelty of prepaid cards, the rates are far more variable than with traditional checking accounts, which are highly standardized. Other prepaid card advantages the Pew study found included lower out-of-network ATM fees, a lack of overdraft penalties and roughly half the annual costs of traditional checking accounts. The study revealed that consumers prefer prepaid cards because they make it easier to budget and eliminate the danger of overdrawing an account. Finally, The Financial Brand noted that the anonymity of prepaid cards is a savory perk for consumers, as many choose to use the cards in situations where they do not want to disclose personal banking information with an organization, such as utilities companies. Consumers view prepaid cards as a method of keeping their data secure. Federal Reserve, others review prevalence of prepaid cards
CardHub recently released a 2012 study of prepaid cards, which analyzed statistics and other data from the Federal Reserve, Mercator Advisory Group and other organizations. According to the news provider, prepaid card transactions increased 20 percent between 2006 and 2009, which was the fastest growth rate for any electronic payment service. Further, the source noted that the Mercator Advisory Group projects the industry will grow by 200 percent between 2010 and 2013, increasing to $117 billion in transactions by next year.
