Prepaid cards are gaining popularity among Generation Y consumers, particularly when it comes to purchasing and paying bills online, according to a recent report.
Prepaid cards are filling a gap cash and credit cards can’t meet, according to a study cited on ZDNet.com. The cards enable “underbanked” customers to make purchases online or in person. They also help consumers obtain financial independence and establish credit without checking accounts or credit cards. Major credit card companies offer prepaid cards, which are accepted everywhere a regular credit card would be accepted.
Prepaid cards also help out retailers: They enable stores to track loyalty points and consumers’ buying history.
Experts predict that the underbanked population will continue to grow, leading to an increased use of prepaid cards. Currently, prepaid cards make up 8 percent of online payment volume, but the amount of prepaid card transactions is expected to increase from $21 billion in 2011 to $32 billion in 2016.
This market will only continue to grow as more prepaid cards are given as gifts. Retailers need to be paying attention to this trend and making sure that their infrastructure, specifically their point of sale (POS) system, is set up to tender it and keep track of prepaid card sales. Retailers must keep track of the prepaid cards they’ve sold, what’s been redeemed and what’s an outstanding liability. Enterprise resource planning systems must be robust to keep track of this information.
Source: ZDNet, April 2012