Jan 30, 2013 Sean Albert
The prepaid card industry continues to heat up, as more financial institutions and service providers launch new products to boost revenues. Increased legislation and regulation regarding credit and debit cards has made many payment processors and merchants prefer prepaid cards as a method of circumventing high interchange fees, while consumers are purchasing the items in greater numbers than ever before.
The biggest adopters of prepaid cards today are the unbanked and underbanked populations, as well as parents who want to teach their teens about financial responsibility prior to allowing them to use traditional plastic card options. Businesses are tailoring prepaid card programs and rewards to reach these target populations, and some of the more niche providers are taking unique approaches to marketing efforts.
Customizing prepaid cards for target markets
The Wall Street Journal recently reported that prepaid card providers are beginning to get more creative with their products, regarding both marketing strategies and the fine print of the accounts.
According to the news provider, the area that seems to have the most potential for growth is the teenage population, though most prepaid card companies have failed to create a rapport with these individuals.
The source noted a study from research firm EPM Communications revealed teens in the United States spend more than $200 billion each year, representing a major opportunity for merchants, financial institutions and service providers. The biggest challenge, the Journal explained, is marketing a product to parents and teens simultaneously, as the two groups have dramatically different preferences.
However, the Journal explained that some providers, such as BillMyParents, have taken unique approaches to capturing teen attention and preference, using celebrities as the faces of marketing campaigns. This specific company signed on Justin Bieber to be the new voice of the marketing scheme, and will be launching a campaign to help teens understand financial responsibility that includes videos starring the teen-pop icon.
A massive move to prepaid
In November, the Mercator Advisory Group released the results of its 2012 Customer Monitor Survey that revealed several aspects of consumer preference regarding prepaid card usage. According to the firm, the biggest prepaid card buyer demographic has moved from young adults to those aged between 35 and 64, with 56 percent of the latter group already using a prepaid card in some form or other.