Banking on the Growth of General Purpose Prepaid Cards
- Tags: Gift & Paycards
Over the last several years, consumers have looked for increasingly flexible prepaid products. General purpose reloadable (GPR) prepaid cards can be used anywhere debit cards are accepted, and there are indications that 2009 may be a good year for these cards despite general economic concerns. But there are still obstacles to widespread consumer adoption of GPR cards, including consumer education, fees, functionality and reload capability.
Prepaid financial tools such as general purpose reloadable cards can be invaluable for people on a budget or for those who are trying to control their spending. They can help keep consumers from overextending themselves with traditional credit products.
Additionally, millions of individuals in the United States don’t have access to—or choose not to have—a traditional checking account. With the current state of the economy, the number of these unbanked individuals may grow in the coming months.
“Credit issues are a real practical barrier for many unbanked. Fifty-six percent of unbanked individuals fear garnishment of their deposits by the bank if they run into credit problems. Forty-three percent simply can’t have a bank account because of credit issues or problems with a previous checking account,” said Aite Group’s Gwenn Bézard. “Monthly and other fees like non-sufficient fund fees for bounced checks or debit card overdrafts are also a concern, as is cash flow. Traditional checking accounts are not well designed for consumers who live paycheck to paycheck and need immediate access to their cash.”