Dec 10, 2012 Sean Albert
Money Morning recently reported that regulations might not always be a detriment to the payment card industry, and that companies that provide the prepaid cards should not be scared of the potential for increased regulations in the coming years. According to the news provider, regulation will help to standardize the industry in a way that improves legitimacy, something that would likely drive further revenues because of increased trust among consumers. The source asserted that because the most common users of prepaid cards are unbanked, underbanked and younger demographics, protections need to be put in place to help avoid potentially shoddy practices on behalf of some providers. Further, Money Morning noted that the number of unbanked individuals has increased from 14 million in 2009 to 17 million this year, illustrating the perpetual move away from financial institutions. Citing data from the Federal Reserve, the news provider added that unbanked household prepaid card users increased from 10 percent in 2009 to 18 percent currently. The same data indicated that prepaid card use is on the decline among fully banked households. Optimizing the experience for highest profits
The prepaid card industry, though it has been around for decades, is still relatively new in its current form. Businesses and other providers of the alternative finance product will need to be diligent when formulating their strategies, as legitimacy will be entirely necessary to push prepaid card use to its highest potential in the coming years.