Aug 27, 2013 Dave King
The prepaid card industry has erupted in recent years, with larger populations moving away from traditional bank accounts and toward alternative financial services. Prepaid card growth has been largely tied to the advent of electronic payments, as well as the rising number of unbanked and underbanked households in the United States following the Great Recession.
Companies have an opportunity to begin relationships with new consumers by way of prepaid cards as well, as teenagers and young adults seem to be shying away from credit cards and debit accounts. By sculpting a product that will be both attractive and engaging for the modern customer, businesses can capitalize on the spread of electronic and alternative payment processing.
Why no credit cards?
New Jersey Newsroom recently listed some of the more common reasons why young adults are not choosing to begin using credit cards, stating that far fewer consumers between the ages of 18 and 29 are starting such accounts today than in other decades. One of the more obvious catalysts for this shift is the massive consumer debt figure, and how many younger individuals do not want to build unsurmountable outstanding payments.
According to the news provider, one study found that the rate of consumers in this age group who do not have a credit card account has increased from 8 percent in 2007 to 16 percent today. The source cited interest rates, the need for better budgeting abilities and issues with credit reporting as some of the top reasons for the move away from traditional credit card accounts.
Additionally, New Jersey Newsroom noted that the average teenager over 18 is more likely to take out a secure credit card, prepaid card or debit account to avoid building debts at an early age.
Prepaid cards have stepped in as a viable replacement for credit accounts, especially for younger individuals and underbanked households.
Another fresh example of prepaid prowess
The Kansas City Star recently reported that the League of Legends, a game created by Riot Games, has started to enter the prepaid card market. According to the source, the American Express Bluebird card will now come in six customizable styles that are based off of characters and settings of the popular online computing game.
The source explained that activity in the game and with the card will integrate, making a more rounded experience for the user. Companies should consider taking a similar approach to ensure a strong reception of new prepaid card products.