Are People Using Prepaid Differently Now Than Two Years Ago?
November 19, 2012
Recently, I had the opportunity to be on a prepaid marketing panel at SourceMedia’s ATM, Debit & Prepaid show in Phoenix, Ariz. One of the questions put to the panel was “Are you seeing people use prepaid differently than two years ago?”
To provide a little context for the answer, the panel was moderated by Phil Valvardi, the head of prepaid processing at Fiserv, and my fellow panelists were Sarah Hamel, first vice president in card services at MB Financial Bank in Chicago, and Rob Levy, manager of insights and analytics from the Center for Financial Services innovation. MB Financial recently has launched a prepaid card that it is marketing in its branches both to traditional customers and those outside of the banking mainstream. CFSI has been doing research and investing on financial products to help low-income people since 2002.
Sarah and Rob both answered yes, they are seeing prepaid used in new ways compared with two years ago. They both noted the growth in the variety of cards, the new use cases that cards are marketed for, the development of mobile apps, and better disclosure, which makes cardholders more confident in using their cards.
While all of these developments have opened new avenues for prepaid cards, that is not the whole story. In many ways, people are using prepaid cards in the same ways that they always have, but they are using new cards to do it. Mercator Advisory Group’s CustomerMonitor Survey Series has found, over the course of multiple surveys, between 15 and 20 percent of the population use some form of prepaid card for budgeting. This includes both open-loop and closed-loop cards.
Additionally, Mercator has heard from program managers and other industry participants that people have bought open-loop gift cards for things like making online bill payments. This led to the development of specialized cards for that purpose. So, consumers are finding new uses for prepaid cards all the time. Program Managers and others in the prepaid industry should pay attention to where their cards are being used and for what. The data may provide a new product development or marketing opportunity.