Industry News

Prepaid debit and payroll card market set to quadruple by 2014

By Louise Hauser

16/09/2010 - It's no surprise that the prepaid debit and payroll card industry is expanding at a rapid rate as consumers look for alternative payment options when making purchases at point-of-sale terminals. However, a new report is showing that the market for these cards could be even bigger than previously predicted.

Aite Group, an independent financial research and advisory firm, interviewed dozens of industry experts and participants and found that the prepaid debit and payroll card market could quadruple over the next four years.

In 2009, the combined revenues of payroll card programs by Walmart, Green Dot and NetSpend was $44 billion, but by 2014 that figure is expected to rise to $164 billion, the survey says. Factors including the housing market bust, financial crisis, surge in unemployment and general economic downturn have contributed to the industry's expansion.

“Many banks still fail to recognize the formidable threat and opportunity represented by prepaid debit cards,” said Gwenn Bézard, research director with Aite Group and author of the report. “For those banks that have remained on the sidelines, now is the time to develop a plan.”

However, these cards are not free of the fees that are a frequent complaint of traditional credit cardholders. According to a recent report by Consumers Union, 12 out of 19 prepaid cards have activation fees ranging between $3 and $39.95, and 16 of the cards charge monthly fees from $2.95 to $5.95.

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