Prepaid cards are becoming increasingly popular – and for good reason. While it used to be more commonly known as the perfect gift card, in today’s day and age, a prepaid card boasts of various innovations and can be found in many forms, and for many uses. From 2012 to 2013 alone, MasterCard saw a 40 percent growth in gross dollar volume (GDV) for its prepaid card business across Asia Pacific, Middle East and Africa – an indication of the technology’s acceptance. Consumers often use prepaid travel cards when travelling as they are a safe and secure alternative to cash or traveller cheques, offering zero liability protection and a locked-in forex rate.
But what many do not realize is that prepaid cards can also benefit college students – relative newcomers to the world of banking – by helping these young spenders learn the nuances of budgeting and financial planning. The ISIC Prepaid MasterCard even entitles college students to an added bonus: more than 40,000 targeted discounts and benefits in over 120 countries.
In India, MasterCard collaborated with the State Government of Chhattisgarh and the Central Bank of India to launch a student prepaid card for the distribution of scholarships, enabling students to access funds for school-related purposes through bank ATMs across the country. Prepaid cards could also be an entry point for financial inclusion. Multi-purpose national identity cards with prepaid payment technology, like the cards used in the Nigerian Identity Card Program, provide those in underserved markets with the safety, convenience and reliability of electronic payments. And prepaid MasterCard e-commerce cards allow consumers to make online purchases without traditional credit or debit cards. Take for example the Rakuten Virtual Prepaid MasterCard, which is the first ever prepaid card in Japan targeting online shoppers.
We are seeing that businesses – particularly small and medium enterprises (SMEs) – are also adopting the use of prepaid cards for their employees’ travel or business-related expenses; meaning easier tracking and reconciliation for the SME owners. From a bank’s perspective, a prepaid card is also scalable and quicker to market as it doesn’t typically use the core bank systems. With newer technology platforms and distribution channels, this can be a more efficient process with lower operating costs. The promise of prepaid is already being realized and the upward trend of prepaid card usage will continue to offer exciting benefits.
Do you own a prepaid card and what do you use it for? Let us know by leaving us a comment below.