Aug 22, 2013 Dave King
Prepaid cards have been around for decades, though they have only recently started to become preferred methods of payment among a wide variety of consumers. The unbanked and underbanked populations, which make up roughly 68 million households in the United States, have been among the biggest drivers of prepaid card growth, though other demographics are also beginning to use the products.
College students, younger individuals and many more, regardless of whether they have a bank account or not, seem to prefer the flexibility and no-strings-attached style of prepaid cards. As a result, more prepaid card service providers are starting to advertise to these individuals, especially as there is such a strong opportunity for financial growth in these emerging markets.
Why prepaid for school?
U.S. News and World Report recently listed several of the best options parents should consider in place of credit cards, asserting that the traditional approach to financing a college student's regular expenditures is not always the safest. Teenagers who have never had a bank account and know relatively little about financial management could dig themselves into a hole with credit cards.
However, the source explained that parents can give their children prepaid cards before shipping them off to their new universities. The biggest advantage of these products in this situation is the ability to teach the new student money management skills without the added risks. Parents can also better monitor their children's expenditures when prepaid cards are in play.
According to the news provider, there are several prepaid card products that are specifically targeted at college students and younger individuals, which generally have greater protections in place for the user. U.S. News and World Report added that parents should shop around the prepaid card market to find the best deals, as many providers are starting to eliminate the majority of fees.
Keep pace with the cashless progression
The prepaid card industry continues to have massive and unchecked potential, especially as more households become underbanked, the student population balloons and traditional bank account holders start to use the products. Companies that have not yet started to consider a prepaid card initiative should do so soon, as these payment methods go hand-in-hand with other electronic methods.
More studies continue to indicate that the global marketplace is going digital, approaching a cashless environment where electronic payments are king. Businesses will need to adapt to capture the increased consumer spending that comes along with economic growth.