Prepaid products are a convenient and flexible option for those looking to manage their expenses. By preloading a set amount of funds, prepaid products are a great way to stay within budget and avoid overspending. Not limited to just phone cards, prepaid products include gift cards, transit passes, and even prepaid debit cards. These options make it easy to give gifts, commute to work, or make purchases online without having to use a traditional credit or debit card. Plus, there are often no credit checks needed to obtain prepaid products, making them accessible to those with limited or poor credit history.
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Data for today’s episode is provided by Javelin Strategy & Research’s Report: Outside Regulatory Forces Impact Prepaid Market
Impact of current economy on your decision to purchase prepaid card products?
- 10% – much less likely to purchase prepaid card products
- 11% somewhat less likely to purchase prepaid card products
- 54% – neither more nor less likely to purchase prepaid card products
- 16% – somewhat more likely to purchase prepaid card products
- 9% – much more likely to purchase prepaid card products
In an uncertain economic environment, the payments industry will need to react to both micro and macro issues. Large-scale policy changes meant to fight inflation, deal with unemployment, and address other macro conditions will be the primary drivers of change in the prepaid market. Secondary drivers include broad and local efforts to curb money laundering and fraud as well as increases to saving products like Flexible Spending Accounts (FSA) and Health Savings Accounts (HSA).
Indirectly there are varying levels of regulation meant to create change in other payment verticals, primarily credit, that will have long-lasting changes in the prepaid market. Continued efforts to cap interchange fees could have secondary impact on loyalty programs, which drive large volumes of prepaid business as a secondary avenue for utilization of rewards. In addition, continued potential to regulate cryptocurrencies could benefit prepaid mechanisms that look to easily convert crypto to fiat currency at point of sale.