News & Resources

Prepaid card security in need of a boost

Aug 08, 2012 Dave King

The benefits of prepaid cards have been undeniable, as more consumers, alternative finance lenders and financial institutions have begun to favor this payment method above many others. One of the only concerns, though, holding consumers back from more widespread adoption is security. The Huffington Post recently reported that fraudsters have started to view prepaid cards as the most preferable method of theft. As the industry is still young, at least regarding the scale it has recently reached, the security practices of both distributors and users of the cards are fairly new, and still in need of refinement. The news provider explained that education of the risks of improper prepaid card handling is the single best deterrent of fraud, while it purported that the responsibility to distribute such knowledge rests within the industry. The Federal Trade Commission does regulate the sector, but some experts the source spoke to asserted that proactive actions on behalf of distributors will fuel expansion. One of the most widely cited benefits of the prepaid card industry is its proven ability to reach the massive underbanked population of the United States. Because this group is already relatively unversed in proper banking practices at large, those in the industry will need to ensure they are equipping consumers with this simple, but invaluable knowledge.