Prepaid Cards: Why this Industry Holds the Potential to Expand Your Business?

Highlights:

• Introduction
• Types of prepaid cards
• Advantages of prepaid cards
• Recent product launches in the industry

The digitalization boom and its effect on the financial sector has always been a subject of different studies. Various new technologies have shaped the working of the financial sector; the advent of card payment systems has been a significant breakthrough in the way financial transactions take place. A popular category of the card payment sector is the prepaid card industry.

What are prepaid cards and what are some popular types?

Prepaid cards, as the name suggests, are cards that are preloaded with some money, and allow users to withdraw cash, make online payments, or pay bills. Thus, as far as their functionality is concerned, they are very much like regular credit and debit cards. However, one major difference between these cards and prepaid cards is that prepaid cards aren’t linked to the user’s savings account or the credit account which the financial institution has opened for the user.

The rising popularity of prepaid cards has led to banks and financial institutions launching different kinds of prepaid cards to suit customers’ needs. The most common type of prepaid card is general purpose cards which can be used similarly as a debit card. Generally, people who don’t have a saving account and can’t use other forms of electronic payment opt for such cards as minimal documentation is required for its receival. Gift cards are another type of prepaid card which has some limitations as compared to general purpose cards. For example, once the money that is loaded in the card gets over, it can’t be reloaded again. Hence, gift cards are generally used for one-time payment. Moreover, there are also limitations on the types of stores in which such gift cards can be used. The growing popularity of gift cards is evident from the fact that the gift cards segment is anticipated to gather an absolute revenue of $4765.37 million by 2032.

Prepaid payroll cards have also become quite popular among different businesses as they help employers to seamlessly pay the wages of their employees. Payroll cards are issued to such employees who don’t have a bank account and hence the money needs to be loaded into a card which doesn’t need any link with an account. However, of all the prepaid card types, prepaid travel card types are one of the most popular. This is because of the ease these cards offer tourists in managing their expenses while travelling. While travelling abroad, all the traveler has to do is put the money in the card and lock it at the current foreign exchange rate. Once locked, any changes in foreign exchange rate won’t affect the amount in the card and the traveler can spend it abroad without any worries.

Why are businesses increasingly preferring prepaid cards?

Prepaid cards, due to some of their unique advantages, have become an interesting proposition for both businesses and their customers. First and foremost, prepaid cards are easier to issue for business and are extremely convenient to use for customers. Almost all retail establishments, public and private institutions, and online websites offer payment options for prepaid cards. Also, depositing and withdrawal of money in such cards is quite easy.

The minimal documentation required for issuing these cards is another advantage why many businesses and individuals prefer prepaid cards as the primary payment option. Additionally, the KYC process involved is straightforward with no complexities. Furthermore, judging from the rising popularity of these cards, many banks have rolled out their plans to offer reward points and discounts to customers who regularly take this payment option. The cards also allow customization of services including setting spending limits for each month or year.

Recent product launches by major companies

Multinational giants in the global financial sectors have recently launched their own prepaid cards which has ignited a competitive spirit in the global prepaid card industry. For instance, in February 2023, Mastercard announced that it was partnering with Obopay, a financial services company based in the US. Under the partnership agreement, both the companies will come together to launch a prepaid card specifically designed for the financial inclusion of rural communities. For achieving this aim, the prepaid cards will be issued to smallholder farmers and other marginalized sections of the rural society.

In another product launch, JEEVES, a financial operating system company, announced in July 2023 the launch of prepaid cards for its customers in Latin America, especially in Brazil, Mexico, and Columbia. As per the company's statement, this product launch will help JEEVES expand its operation in this part of the world significantly soon.

To sum it up, the global prepaid cards industry has witnessed a huge boom in the past few years owing to the massive benefits these cards provide to businesses and customers. The different types of cards that have been launched by major financial services companies will further widen the scope of this industry in the coming period.

For a comprehensive analysis of the strategies your business should adopt for thriving in the prepaid card industry, talk to our experts today!

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