3 great options for growing #prepaid programs in 2017
Consumers increasingly turn to prepaid cards as their preferred non-cash method of payment. Prepaid cards, in fact, had the fastest growth rate of any payment type between 2006 and 2012. By 2018, the Consumer Financial Protection Bureau (CFPB) predicts as much as $121 billion will be loaded onto prepaid cards.
For credit unions, this heightened consumer interest in prepaid makes it especially important to review and understand the prepaid options available. In a recent white paper exploring five new prepaid regulations, we identified our top three recommendations for prepaid cards. These three options provide credit unions with the greatest opportunities for growth.
- General purpose reloadable (GPR) cards – These cards are initially loaded with a defined amount of money and reloaded with additional funds as needed. Many GPR cards are branded with major debit card networks and can be used at any location that accepts regular debit cards.
- Payroll cards – A reloadable prepaid debit card that can be used in place of traditional paychecks, this type of card has experienced explosive popularity in recent years.
- Gift cards – This prepaid debit card can be branded to be used at a specific retailer or branded by a major debit card network. It can be used at any location that accepts regular debit cards and gift cards.
Consumers across all demographics flock to gift cards. GPR and payroll cards, on the other hand, are most often used by unbanked and underbanked consumers to manage their finances. Recent studies have also revealed a blossoming interest in prepaid cards among “thoroughly banked consumers,” as well as younger consumers.
Credit unions interested in providing smart and convenient financial solutions to target consumer segments may be well positioned to participate in the prepaid card resurgence. The key is to partner with experienced prepaid card experts who are up-to-speed on regulatory requirements and forward-thinking about how prepaid cards are shaping future payment methods.