Trends in consumer spending showed that 2015 will be the year of the ‘prepaid economy’ as consumers increasingly reject credit cards, seek to reduce online fraud and switch to new ways to access services such as public transport, according to a survey by Prepaid International Forum (PIF).
Go deeper with GlobalData
The research found that the number of prepaid card products available to UK consumers has increased by 380% from 50 in 2007 to over 240 at present.
The PIF, a trade association that represents the prepaid card industry, said that the growth in prepaid products was driven by greater regular use of prepaid cards to pay for goods and services and also with the decline in credit card usage.
In June 2014, the British Retail Consortium found that the number of transactions using credit cards had declined 13% indicating that post-crash UK consumers are more careful about credit.
According to the research, 6% of the consumers across the EU are using prepaid cards for online purchases to reduce the risks of online shopping. Also, around £5bn is spent on gift cards in the UK each year.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataThe survey indicates that 2% of prepaid cards in the UK are being used by those who do not have a bank account, such as teenagers. In Italy, 15 million people do not have bank accounts and are three times more likely to use a prepaid card as an alternative to traditional banking.
Meantime, MasterCard estimates that the UK and Ireland will pay $15bn of government benefits issued via prepaid cards.
PIF spokesperson Alastair Graham said: "Prepaid products provide flexible solutions where cash, credit or debit cards are not the answer.
"Increasing online fraud is a good example of a driver for these changes – consumers want the flexibility of being able to buy over the Internet, but have an increasing awareness and fear of financial details being hacked or misused.
"As consumers get more used to having a number of prepaid cards in their wallets, their application and use will continue to grow."
