The market for prepaid debit cards is still
large and growing fast, according to Javelin Strategy &
Research.
Thirteen percent of American consumers had
prepaid cards in 2011 compared with 11% in 2010, the Prepaid
Cards and Products in 2012: Enabling Financial Access for
Underbanked and Gen Y Consumers found.
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The rise in prepaid cards is parallel to the
decline in traditional banking products, such as credit and debit
cards.
Javelin Research cited higher fees in those
product categories as the main reason for the switch to prepaid
cards.
e-commerce growth is another contributor for
the increasing use of prepaid cards, as – according to Javelin
Strategy – it is the most accessible payment option for consumers
underserved by the banking system.
The study found that the e-commerce market had
expanded by 909% in the ten years to the end of 2011, peaking at
$309bn. In the twelve months to the end of December 2011 alone, the
market grew by 16%.
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By GlobalDataAlthough prepaid cards still account for only
8% of the total online payments markets, the volume of total funds
held on prepaid cards could soar by 52% between 2011 and 2016 to
$32bn.
Recent regulations such as the Credit Card
Accountability Responsibility and Disclosure (CARD) Act of 2009 and
the Durbin Amendment have also fostered a positive environment for
the expansion of prepaid cards, according to the Javelin study.
Javelin Strategy and Research conducted the
survey online from a random sample panel of 3,210 American adult
consumers.
