Prepaid buyers are increasingly younger: 2 in 3 young adults (aged 18-34) surveyed bought prepaid cards, up from 3 in 5 surveyed in 2013. And they are increasingly mobile enabled, as nearly 2 in 3 smartphone owners, 3 in 4 smartphone and tablet owners, and 9 in 10 adults who have paid for goods and services by mobile phone have bought prepaid cards within the previous year.
New research from Mercator Advisory Group finds prepaid cards are often a primary payment vehicle for mobile payments.
Prepaid cards are now far more than just gift cards, according to the 2014 survey data, which finds more consumers receiving funds on prepaid cards as incentives, rebates, refunds, and even payroll and money transfers than in previous years. Consumers surveyed indicate they want a prepaid card that offers the conveniences of a bank account, including mobile apps, electronic bill payment, high-quality customer service, alerts, easy access to reloading, and fraud protection as well as ways to gain rewardsall with low setup and maintenance fees.
The two fastest growing segments of prepaid are open-loop gift cards in the form of general purpose nonreloadable gift cards and general purpose reloadable cards. T the purchase demographics are changing, with open loop gift cards are no longer bought more often by lower income earners. Today, higher-income earners (household income $100,000 or more) are more likely to buy GPR cards than in previous years. Mercator Advisory Group expects that as open-loop prepaid cards become more ubiquitous and begin to offer more services once provided only by financial institutions, prepaid cards will be more broadly used by U.S. consumers as a money management tool, especially for their privacy, convenience, and enhanced security.
Even if they have a checking account, many U.S. consumers are attracted to prepaid cards as a money management tool that lets the cardholders control their spending and make electronic payments from funds they set aside, without accruing debt from credit cards or attaching their bank account to the transaction, states Karen Augustine, manager of CustomerMonitor Survey Series at Mercator Advisory Group and the author of the report. Prepaid buyers are more likely to be younger, mobile-enabled, and are more attracted now by enhanced security and mobile banking features.
For more data on Prepaid Cards access CardData®. For information and commentary on Prepaid Cards visit the searchable CardFlash® Library of more than 58,000 articles published since 1995. RAM Research® forecasts on Prepaid Cards are available exclusively through CardWeb.com.®