Aug 04, 2013 Dave King
There is no doubt that more financial institutions, alternative lenders and businesses are beginning to enter the prepaid card market to reach the unbanked and underbanked populations. As roughly 20 percent of all U.S. households are currently considered underbanked or unbanked, organizations are launching prepaid card strategies to boost revenues and reach this emerging market.
Forbes recently explained some of the best and worst parts of the prepaid card industry as it stands currently, asserting that the market is forecast to grow at a compound annual growth rate of 19.7 percent between 2010 and 2016. Some of the trends in the prepaid card market are indicative of which strategies work best and which will fall short in the fight for a stronger unbanked and underbanked following.
According to the news provider, some of the least successful prepaid card efforts are those that include a broad range of fees, including money levied when the user loads the product, makes purchases with it and monthly tolls. Since the unbanked and underbanked populations are more interested in accounts that do not cost a lot of money to hold, prepaid card providers should keep fees low and transparency high.
The source explained that the most successful prepaid card efforts are those that have no hidden fees whatsoever, and are the least expensive to use overall. Forbes cited a Consumer Reports study that found the American Express Bluebird prepaid card is the best on the market, especially when it includes direct deposit, as there are no fees aside from out-of-network ATM charges and low rates for reloading costs.
Businesses and financial services providers should take note of the best practices of creating a prepaid card strategy. By cultivating the most desirable product, companies can reach an ever-increasing market of unbanked and underbanked households.