PaymentsJournal
No Result
View All Result
SIGN UP
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
PaymentsJournal
  • Commercial
  • Credit
  • Debit
  • Digital Assets & Crypto
  • Digital Banking
  • Emerging Payments
  • Fraud & Security
  • Merchant
  • Prepaid
No Result
View All Result
PaymentsJournal
No Result
View All Result

Prepaid Cards: A Catalyst for Financial Health

By Thea Garon
July 18, 2017
in Industry Opinions
0
0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn

Credit card payment, shopping online

A few weeks ago, I attended the Canadian Prepaid Providers Organization’s (CPPO) first-ever Prepaid Symposium. The symposium brought together stakeholders from across the United States and Canada to discuss the current and future state of the prepaid card industry in North America. As a New York-based representative of the Center for Financial Services Innovation (CFSI), I joined a panel of other U.S. representatives to discuss promising prepaid innovations south of the border.

During the half-day conference, I was struck by the palpable sense of excitement among conference attendees. Canadians have good reason to be excited about prepaid cards: Although adoption is still relatively low in Canada – in 2015, an estimated $3.1 billion was loaded onto Canadian open-loop prepaid cards, compared with $280.2 billion in the U.S. – industry stakeholders are beginning to appreciate the important role that prepaid cards can play in helping Canadians build long-term and lasting financial health.

My organization, CFSI, defines financial health as coming about when an individual’s daily financial systems set them up to be resilient and pursue opportunities over time. While financial health is influenced by an individual’s attitudes and behaviors, financial institutions, government agencies, non-profit organizations, and employers can all play an important role in helping consumers lead financially healthy lives by designing products, policies and other solutions that put the financial health of the consumer first.

One of these solutions is the prepaid card. For the uninitiated, here are a few ways that prepaid cards can help Canadian consumers build and sustain financial health:

1. Provide convenience and accessibility
Prepaid cards are accepted at most major retailers, online billers, and anywhere that Mastercard, American Express, or Visa is accepted. For prepaid cardholders without a bank account, prepaid cards provide them with valuable access to seamless bill pay services or online commerce. Prepaid programs also offer users multiple, convenient ways to load and spend their money. According to CFSI’s most recent Prepaid Industry Scorecard, two-thirds of prepaid cards (66 percent) sampled in the U.S. allow cardholders to load funds via mobile remote deposit capture (mRDC), 80 percent of cards allow users to make person-to-person payments, and nearly all cards (99.7 percent) allow users to reload their cards using a simple one-step reload process. By offering customers a convenient way to load and spend their money, prepaid cards provide users with a convenient and accessible financial tool to manage their money.

2. Offer enhanced functionality and money management tools
Beyond offering cardholders convenience and accessibility, prepaid cards can also help consumers actively build financial health with sophisticated money management tools, such as budgeting platforms and savings accounts that allow users to plan their expenses and save for the future. Prepaid cards are also offering cardholders an increasingly personalized experience. Two-thirds of prepaid cards (66 percent) sampled in the U.S. allow consumers to choose an account plan and fee structure that best suits their needs. More than half (60 percent) of sampled cards allow users to customize budgeting alerts. As a result of features like these, prepaid cards are becoming increasingly popular among individuals with bank accounts. In fact, much of the recent growth of the U.S. prepaid card industry is attributable to increased usage among cardholders with bank accounts. According to the Pew Charitable Trusts, seven percent of U.S. adults had a checking account and also used prepaid cards monthly in 2014, compared to four percent in 2012.

3. Help employees build financial health
In recent years, employers have come to appreciate the essential role they play in helping employees build long-term and lasting financial health. State and local governments, large corporations, mid-size employers, and small businesses have increasingly turned to payroll cards to disburse wages and earnings to their employees. Not surprisingly, the payroll card industry has grown rapidly as a result. In 2014, the U.S. payroll card industry grew at an annualized rate of 9 percent to $33.5 billion in load volume. For employees without bank accounts, payroll cards offer an affordable, safe, and convenient way of receiving their wages. For employees with bank accounts, payroll cards offer an additional money management tool to use alongside tools offered through their checking or savings accounts.

These are just a few of the many ways that prepaid cards can help Canadians lead financially healthy lives. As prepaid and payroll cards continue to adopt increasingly sophisticated features and functionality, the distinction between prepaid cards and bank accounts will continue to blur. In the not-too-distant future, consumers will not look for the “best prepaid card” or the “best checking account.” Instead, they will simply look for the best financial tool that will allow them to manage their money, spend wisely, and save for the future. Whether that tool is a prepaid card or checking account will be immaterial.

Financial service providers, employers, and other companies invested in the financial health of Canadians would be wise to anticipate and embrace this future. The attendees at last month’s CPPO Prepaid Symposium clearly understood the potential of prepaid cards to help Canadians build financial health, but more research is needed to assess the current state of the Canadian prepaid card industry and to explore how prepaid card providers can best position consumers for financial success. In partnership with the CPPO, CFSI is looking forward to continuing to explore and invest in the Canadian prepaid card industry to ensure that these valuable financial tools help Canadians build long-term and lasting financial health.

***********************************************************************
The Center for Financial Services Innovation (CFSI) is an authority on consumer financial health. CFSI leads a network of financial services innovators committed to building a more robust financial services marketplace with higher quality products and services. Through its Compass Principles and a lineup of proprietary research, insights and events, CFSI informs, advises, and connects members of its network to seed the innovation that will transform the financial services landscape. More information is at cfsinnovation.org

0
SHARES
0
VIEWS
Share on FacebookShare on TwitterShare on LinkedIn
Tags: Prepaid

    Get the Latest News and Insights Delivered Daily

    Subscribe to the PaymentsJournal Newsletter for exclusive insight and data from Javelin Strategy & Research analysts and industry professionals.

    Must Reads

    commercial card, Allpay ClearBank Prepaid Payments, wealth transfer

    How Banks Can Capture the Wealth Transfer from Boomers to Gen Z

    June 20, 2025
    embedded lending

    Embedded Lending as a Growth Strategy for ISVs—How to Maximize Revenue Potential

    June 18, 2025
    merchant ai

    Merchants Find More Use Cases for AI Amid Risks

    June 17, 2025
    prepaid payroll

    Taking the Check Out of Paycheck: The Role of Prepaid in Payroll

    June 16, 2025
    Banking-as-a-service BaaS

    Remodeling Main Street: How Community Banks Can Leverage the Banking-as-a-Service Paradigm

    June 12, 2025
    How Employee Performance Enhances the Customer Experience

    Three Strategies to Maximize Loyalty in the AI-Driven World 

    June 11, 2025
    PFM tools

    How FIs Are Cutting Through Subscription Clutter with PFM Tools

    June 10, 2025
    child identity theft

    Stranger Danger: Protecting Your Children from Identity Theft

    June 9, 2025

    Linkedin-in X-twitter
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Commercial
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Digital Banking
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter
    • About Us
    • Advertise With Us
    • Sign Up for Our Newsletter

    ©2024 PaymentsJournal.com |  Terms of Use | Privacy Policy

    • Commercial Payments
    • Credit
    • Debit
    • Digital Assets & Crypto
    • Emerging Payments
    • Fraud & Security
    • Merchant
    • Prepaid
    No Result
    View All Result