This article from the Credit Union Times asserts that because the cost of prepaid products sold by large and mid-sized banks is dropping, credit unions are at risk. The article leads with the thought that:
Credit unions face a heightened degree of competition from prepaid cards, according to a new report from CardHub.com, a website dedicated to helping consumers with payment issues.
In its 2013 Prepaid Card Report, CardHub recounts that the cost of using a prepaid, reloadable card instead of a checking account has dropped 46% from last year and that cards from large asset institutions average 200% less expensive than cards from smaller asset institutions.”
But the CardHub study only researched prepaid cards sold by large and small banks. So while the above may appear threatening, the very next paragraph takes the sting out:
But the report also found that 62% of existing cards do not carry enough services to make them viable replacements for checking accounts, such as online bill pay and free check loading.
So perhaps the Credit Union Times should direct credit unions and community banks to look elsewhere for this threat. Prepaid cards available at supermarkets, convenience stores, and pharmacies are sold to consumers as a replacement to traditional financial institutions.
Click here to read more from The Credit Union Times.