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21/12/2009 -
Move over, credit card processing: prepaid card processing is gaining a larger share of the payment processing market, reported the Wall Street Journal. The newspaper reported that the growing use of prepaid cards is fueled primarily by an increased focus on financial responsibility, a larger user base, and an increased adoption rate by the public and private sector.
Because prepaid cards are not tied to a bank account, consumers cannot overdraw their accounts or get themselves into debt, and for that reason they have emerged as a popular payment processing choice during the recession.
And because they are not tied to a bank account, it opens the user base substantially - prepaid cards, for example, are often used by teenagers learning financial responsibility and by the millions of unbanked people around the world.
The Journal also noted that more government agencies are using prepaid cards to pay out unemployment benefits and food support, while private companies are issuing prepaid cards for employee compensation and consumer rebates.
As a result, the major payment processing card brands are investing more heavily in the prepaid sector, the article noted.
A recent report from Mercator Advisory Group found a similar trend - the payment processing research and advisory firm upwardly revised its already-optimistic forecast for the prepaid card sector.
